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Africa Incentive Survey 2016“Africa is open for business”
A guide to tax / incentives in Africa
March 2016
22016 Africa Incentive Survey
Foreword
Leaders in Africa are no strangers to dealing with difficult economic and political
challenges, and this resilience will stand them in good stead to institute a
framework of intra-Africa trade that will benefit all African economies.
I say this with conviction because this Africa Incentive Survey - Africa is open for
business, is a clear indication of how Africa is rising. I believe that the survey is an
invaluable guide and if you’re looking to understand the various incentives available
in Africa, this is the perfect roadmap for you.
The response from our African team in conducting this survey was tremendous,
and we are grateful to all of our personnel that have contributed to it. KPMG’s
African footprint is well established, with professionals ready to assist in advising
you across the continent. In addition, I am pleased to let you know that we are
developing an Africa Incentives desk which will be headed up by Mohammed Jada
(Head: R&D Tax and Incentives) and his thoughts are on page 5, including the
impact of trade agreements and the growing trend of trade regionalism within
Africa.
There’s an African Proverb that says “If you want to go fast, go alone. If you want
to go far, go together.”
Trevor Hoole. Chief Executive, KPMG in Southern Africa
Not only does this Survey provide a very good insight on the tax regimes in 28
countries across Southern, Eastern, Northern and Western Africa, but it also
provides valuable local “Good to Know” facts from our KPMG network of tax
professionals across Africa.
For example, if purchase orders for capital equipment are placed before receipt of
Ministerial pre-approval confirmation, then a company would be precluded from
accessing the grants intended to be available for such capital investment in South
Africa!
It is interesting to note that more than three-quarters of the countries surveyed
have Special Economic Zones regimes in place, and this confirms my view that
Africa is very much part of the global trend wherein governments are rapidly
moving to create specialised, bespoke regional zones of development to
stimulate trade and investment.
I believe that this survey is an excellent first reference for any company looking
to invest or expand their business into Africa, and this survey cements the fact
that Africa is indeed open to business.
Jane McCormick, KPMG Global Head of Tax
Africa is open for business
32016 Africa Incentive Survey
Northern Africa
— Algeria
— Chad
— Libya
— Morocco
— Sudan
— Tunisia
43
45
46
48
50
51
Western Africa
— Cameroon
— DRC
— Ghana
— Nigeria
— Senegal
— Sierra Leone
54
55
56
58
62
64
References/Sources 65
Acronyms 66
Highlights of the survey 67
Contents
Overview – Africa is rising 4
Tables and useful data
— Survey Comparison Table
— GDP and Population data
8
9
10
Southern Africa
— Angola
— Botswana
— Malawi
— Mauritius
— Mozambique
— Namibia
— South Africa
— Swaziland
— Zambia
— Zimbabwe
13
15
17
19
20
22
23
26
27
28
Eastern Africa
— Djibouti
— Ethiopia
— Kenya
— Rwanda
— Tanzania
— Uganda
30
31
33
35
37
39
Special Economic Zones
(SEZ), Export Processing
Zones (EPZ) and Free
Trade Zones (FTZ) are
trending as an industrial
developmental model in
African countries after the
success of these zones in
Asia. At least 21 of the 28
countries surveyed in
Africa have incentives
relating to SEZ, EPZ or
FTZ
42016 Africa Incentive Survey
Introduction
The purpose of the survey is to understand the landscape of incentives offered by African countries, both to
local and foreign investors. Whilst in an ideal world, information relating to all countries in Africa would have
been included in such a survey, for a variety of reasons (including time limitations), this survey contains
information across 28 countries in Africa that represent 81% of Africa’s USD 2.4 trillion GDP and which are
home to three-quarters of Africa’s 1.2 billion population[1]
.
More than a third of the 28 countries surveyed have incentives related to manufacturing. It appears that
African countries are reforming the incentive policies to include manufacturing incentives, to attract
manufacturing FDI within their countries.
South Africa, Nigeria and Morocco are notably the only countries in Africa that offer cash grants in addition to
tax incentives, all of which require prior approval by government.
Summary tables for quick reference have been provided on Pages 9 to 11, and these have been divided into
four regional areas, with detailed information provided for each country from page 13 to 64:
The countries participating in this survey have achieved a 9% average growth in their GDP (2012 to 2014),
whilst their populations have grown by 43.2 million to just under 870 million people during this period.
What this means is that the sheer size of the population in Africa (approximately 18% of the world’s
population) and the opportunities this affords to business – cannot be ignored.
Overview – Africa is rising
Countries included in the Survey Average CIT Rate
Southern Africa Angola, Botswana, Malawi, Mauritius, Mozambique,
Namibia, South Africa, Swaziland, Zambia, Zimbabwe
27.8%
Eastern Africa Djibouti, Ethiopia, Kenya, Rwanda, Tanzania, Uganda 30%
Northern Africa Algeria, Chad, Libya, Morocco, Sudan, Tunisia 28.8%
Western Africa Cameroon, DRC, Ghana, Nigeria, Senegal, Sierra
Leone
30.5%
Source: https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online.html
The global
average
corporate tax
rate is 23%,
with the
average rate
for countries
surveyed being
29%.
52016 Africa Incentive Survey
Global trend towards regionalism
When conducting a survey on the tax/cash
incentives that African countries avail to both local
and foreign investors, it is also important to
understand this against the background of the
political and economic trade relations between
African countries, as well as that between Africa
and other regional trading blocks outside of Africa.
In this context, an understanding of the various
trade agreements that African countries have
entered into and the ability to traverse the unique
complexities of each trade agreement, is necessary
in order for business to understand the level of
access for their products into and within Africa.
This, together with the extent of costs associated
to get such products to the markets that need
them – is essential in any supply chain operating
within Africa.
In the current global economic downturn,
protectionism on both a local and regional level is
expected to gain momentum. In particular, food
and domestic manufacturing production capabilities
are expected to take on much more political
significance in many countries across the world. An
example is the recent year-long prolonged
negotiations on the continuation of the AGOA[2]
treaty benefits between South Africa and the USA,
with South Africa being compelled to compromise
in allowing US poultry and beef imports into South
Africa in order to continue to benefit from the
valuable AGOA trade agreement.
Free Trade Agreements (FTAs) can mitigate the
impact of protectionist measures, reducing or
removing tariff duties and opening access to a
market or markets.
Overview – Africa is rising (cont.)
[1] Figures are at 2014, Source: World Development Indicators (World Bank) http://data.worldbank.org/country
[2] The African Growth and Opportunity Act (AGOA) offers tangible incentives for African countries to continue their efforts to open their economies and build free markets with
preferential access to the USA.
Reference 1 : see Page 65
We note the plethora of FTAs that have been
concluded within Asia, the EU and most recently
the Trans Pacific Partnership (TPP) involving the
USA and 12 countries across the Pacific Rim in
what President Obama has described as a
prototype for a 21st Century trade agreement and a
potential vehicle to establish a free market in the
Asia Pacific region.
The world has also seen an increasing number of
bilateral and multilateral trade agreements being
entered into in the past decade. More than 130
new trading arrangements have been notified since
the creation of the World Trade Organisation, and
more than 400 regional trade agreements are
currently being implemented.
The ASEAN countries are central to the
development of regionalism in the East Asian
region, and it is expected that their ‘circle’ would
extend to encompass China, Korea and Japan
(known as ASEAN + 3), and later possibly to
include Australia, New Zealand and India (referred
to as ASEAN + 6). The latter process would create
a market of over 3 billion people, having a
combined GDP of US$14 trillion. This has come
close to fruition in that the TPP mentioned above,
has recently being signed by 12 countries in Asia
and the Americas across the Pacific rim, and is
currently awaiting ratification by the US Senate.
According to the
World Bank, 5
African countries
in Sub – Saharan
Africa (Uganda,
Kenya, Mauritania,
Benin and
Senegal) were
among the top ten
improvers globally
in the 2015 Doing
Business rankings
for 2013/2014.
62016 Africa Incentive Survey
The future: a united African trade market
Africa too, is party to a growing number of bilateral and multi-lateral trade agreements, providing African
exporters with an opportunity to claim preferential treatment. Africa’s answer to the above is the Tripartite
Free Trade Area (TFTA), which covers 26 (out of 54) African countries and is aimed at creating the biggest
free-trade area on the African continent.
The African continent features 17 trade blocs and the TFTA will result in consolidating the three significant
trade blocks: the East African Community (EAC), the Southern African Development Community (SADC) and
the Common Market for Eastern and Southern Africa (COMESA). The graph below[3]
is a good illustration of
the impact that the TFTA could have.
As can be seen by the almost decade long time-frame for the TPP to be negotiated, getting a TFTA across
Africa would also not be without its own challenges. Not only would African countries need to significantly
expand its range and volume of goods manufactured and produced, but it would also need to focus on
Africa-2-Africa supply chains and its means of production.
Overview – Africa is rising (cont.)
[3]Tear down these walls, 27 Feb 2016, The Economist
www.economist.com/news/21693562
72016 Africa Incentive Survey
From the survey conducted it is clear that many
African countries specifically offer tax incentives to
stimulate the manufacturing, agricultural, and
industrial base in their respective countries, with
some more advanced economies also offering
incentives to localise financial services industries. A
case in point is Kenya and Cameroon which
provides tax breaks for companies that list on its
stock exchange.
We have noticed a recent trend in more African
countries attempting to diversify their economies to
shift away from an over-reliance on extractive
industries and to branch into mainstream industries
such as manufacturing and value-added services
industries. African countries appear to be
introducing new or revised incentives, seemingly to
compete more favourably for both local and foreign
direct investment.
The success of South Africa in having a diversified
economy appears to be rubbing off on its northern
neighbours. For example:
• Nigeria is currently striving to attract foreign
direct investment to grow other sectors of the
economy (such as the motor manufacturing
industry) given the decline of revenue from the
oil sector. This is evident in the various tax
incentives and government grants that have been
introduced;
• Rwanda has recently published in the Official
Gazette of the Republic of Rwanda, the new
Regulating Investment Promotion and facilitation
(Investment code), which contains a package of
investment incentives to Foreign as well as local
investors; and
• Kenya has recently enacted a Special Economic
Zone Act to extend incentives to other sectors
including Services which are established in
designated zones.
Overview – Africa is rising (cont.)
Lessons to learn
No trade deal provides any country with a
guaranteed return of extra revenue, and every
trade agreement is unique with complex
negotiations on the details therein. Teamwork and
commitment is required by African leaders to
remedy common problems, such as regional
power production, local supply chain beneficiation
of mineral wealth and rolling out port, rail and road
infrastructure. This, in itself, offers the opportunity
for Africa to start doing business with itself, for
itself, and will no doubt assist in better regional
integration.
The benefits to Africa of a Pan- African FTA (when
this eventually is negotiated!), would be mainly
accessible to those companies that are prepared
to do the hard yards understanding the many
regional agreements, building relationships with
potential customers and developing the products
that meet their requirements. In the interim,
companies that are best at ‘sorting the chaff from
the wheat’ will be able to take full advantage of
the potential of such trade agreements.
The top recipients of
FDI inflows in Africa
during 2014 were
South Africa (USD 5.7
billion); DRC (USD5.5
billion), Mozambique
(USD4.9 billion); Egypt
(USD4.8 billion) and
Nigeria (USD 4.7
billion). The primary
industries of FDI were
in the extractive
industries, such as oil
and gas and mining.
Reference 2 : see Page 65
82016 Africa Incentive Survey
Tables and useful data
Four of the 28
African countries
in this survey
offer a CIT rate of
23% or lower,
with Mauritius
being the lowest
(15%).
92016 Africa Incentive Survey
Survey Comparison Table
Country
Offer
Tax
Incentives
Offer
Cash
Grants
Pre-approval
requirements
SEZ/Export
Free-zones
CIT
Rate
(%)
Reduced CIT
Rate (SEZ
/Free-zones)
Job creation
requirement
Training
incentive
Algeria Yes No Yes Yes 23 0 (i) Yes No
Angola Yes No Yes Yes 30 - Yes No
Botswana Yes No Yes No 22 15 Yes Yes
Cameroon Yes No Yes Yes 33 0 No No
Chad Yes No Yes No 40 - No No
DRC Yes No Yes No 35 0 (ii) No No
Djibouti Yes No Yes Yes 25 0 No No
Ethiopia
Yes No Yes Yes
30
Tax Holiday
Period
No No
Ghana Yes No Yes Yes 25 0 No No
Kenya Yes No Yes Yes 30 0 No Yes
Libya
Yes No Yes No
20
Tax Holiday
Period
No No
Malawi Yes No No Yes 30 - No No
Mauritius Yes No No Yes 15 15 No No
Morocco Yes Yes (iii) Yes Yes 30 10 No Yes
Mozambique
Yes No Yes Yes
32
Tax Holiday
Period
No Yes
Namibia Yes No Yes Yes 33 - No Yes
Nigeria Yes Yes Yes Yes 30 0 Yes Yes
Rwanda Yes No Yes Yes 30 0 Yes No
Senegal Yes No Yes No 30 15 (iv) No No
Sierra Leone Yes No Yes No 30 - Yes Yes
South Africa Yes Yes Yes Yes 28 15 Yes Yes
Sudan Yes No Yes Yes 35 0 No No
Swaziland Yes No No Yes (v) 27.5 - No Yes
Tanzania
Yes No Yes Yes
30
Tax Holiday
Period
No No
Tunisia Yes Yes Yes No 25 - No Yes
Uganda Yes No Yes Yes 35 - No No
Zambia Yes No Yes Yes 35 15 No No
Zimbabwe Yes No Yes No 25.75 15 (iii) No No
i. For 5 years when creating 100 jobs.
ii. Provided DRC government has approved specific project or co-operation agreement entered into.
iii. Contribution by Moroccan government of 20% of expenses where large scale projects > MAD
100m are undertaken, and co-operation agreement is entered into.
iv. For approved export centred companies.
v. Not yet in-force.
102016 Africa Incentive Survey
GDP and Population data of countries surveyed
Southern AfricaGDP (2014) USD
(billion)
Population
(2014) million
Growth in GDP
(2012 – 2014)
Growth in
Population
(2012-2014)
Angola 138.4 24.2 10.25% 6.80%
Botswana 15.8 2.2 6.90% 4.08%
Malawi 4.3 16.7 0.41% 6.34%
Mauritius 12.6 1.3 10.35% 0.40%
Mozambique 15.9 27.2 9.66% 5.76%
Namibia 13.0 2.4 -0.16% 4.85%
South Africa 350.1 54.0 -11.90% 3.17%
Swaziland 4.4 1.3 -10.18% 3.04%
Zambia 27.1 15.7 8.53% 6.32%
Zimbabwe 14.2 15.2 14.56% 4.67%
Total 595 billion 160.3 millionAverage growth
in GDP: 3.84%
Average growth
in population:
4.5%
Eastern AfricaGDP (2014) USD
(billion)
Population
(2014) million
Growth in GDP
(2012 – 2014)
Growth in
Population
(2012-2014)
Djibouti 1.6 0.9 17.39% 2.71%
Ethiopia 55.6 97.0 28.40% 5.17%
Kenya 60.9 44.9 20.88% 5.45%
Rwanda 7.9 11.3 9.29% 4.85%
Tanzania 48.1 51.8 22.95% 6.53%
Uganda 27.0 37.8 16.19% 6.73%
Total 201.1 billion 243.6 millionAverage growth
in GDP: 19.1%
Average growth
in population:
5.2%
Source: http://data.worldbank.org/country
Source: http://data.worldbank.org/country
112016 Africa Incentive Survey
GDP and Population data of countries surveyed (cont.)
Northern AfricaGDP (2014) USD
(billion)
Population
(2014) million
Growth in GDP
(2012 – 2014)
Growth in
Population
(2012-2014)
Algeria
213.5 38.9
2.14% 3.99%
Chad
13.9 13.6
12.57% 6.85%
Libya
41.1 6.3
-49.77% -0.39%
Morocco
110.0 33.9
11.95% 2.84%
Sudan
73.8 39.4
17.75% 4.34%
Tunisia
48.6 11.0
7.71% 2.03%
Total 501 billion 143 millionAverage growth
in GDP: 0.4%
Average growth
in population:
3.3%
Western AfricaGDP (2014) USD
(billion)
Population
(2014) million
Growth in GDP
(2012 – 2014)
Growth in
Population
(2012-2014)
Cameroon 32.1 22.8 21.07% 5.14%
DRC 33.1 74.9 20.60% 6.52%
Ghana 38.6 26.8 -7.92% 4.86%
Nigeria 568.5 177.5 23.33% 5.49%
Senegal 15.7 14.7 11.48% 6.48%
Sierra Leone 4.8 6.3 29.33% 4.51%
Total 692.8 billion 322.9 million
Average growth
in GDP: 16.3%
Average growth
in population:
5.5%
Source: http://data.worldbank.org/country
Source: http://data.worldbank.org/country
Southern Africa
Green Point
stadium, Cape
Town
132016 Africa Incentive Survey
Tax incentive
New PIL
Tax incentives
New PIL
Extraordinary tax
benefits
Industrial Tax Code
Tax Benefit regarding the
Reinvestment of
Voluntary Reserves
Special Economic Zones
("SEZ")
Luanda-Bengo
Minimum
Investment
required
• Foreign investments -
total amount equal or
higher than the amount in
Kwanzas corresponding
to USD 1 Million.
• Domestic investments -
total amount equal or
higher than the amount
equivalent in Kwanzas
corresponding to USD
0.5 Million.
Investments equal or
higher than USD 50M.
Criteria:
• Create 500 or 200 jobs
for Angolan citizens, in
Zone A or B,
respectively.
Profits which were taken to
reserves and reinvested,
within the following three
fiscal years, in new facilities
or equipment for
manufacturing or
administrative activities.
None.
Maximum
benefit
available
100% tax reduction on
Industrial Tax, Real Estate
Transfer Tax ("Sisa") and
Tax on Invested Capital for
a period of 10 years (the
percentage of reduction is
based on a certain score
attributed to each
investment project
according to a table
attached to the new PIL).
To be negotiated with the
relevant authorities, and
expected to be more
beneficial than the standard
PIL Tax Incentive.
Up to 50% of the
investment amount may be
deducted to the taxable
income.
To be negotiated with the
SEZ Management
Company.
Type of benefit Tax reduction Extraordinary Tax benefits Tax deduction
Tax exemption, Tax
reduction, Financial
Support.
Training Benefit NoneUp to negotiation with SEZ
Management Company.
Southern Africa: Angola
A New Private Investment Law (“PIL”) was published in Angola establishing the general basis of private
investment in the Republic of Angola. The PIL sets out the principles and rules regarding the eligibility of
incentives and other facilities to be granted by the State.
For further information please contact:
Amaral, Gustavo
Associate Partner, Corporate Tax
+244 227 280 101
142016 Africa Incentive Survey
Tax incentive
New PIL
Tax incentives
New PIL
Extraordinary Tax
benefits
Industrial Tax Code
Tax Benefit regarding the
Reinvestment of
Voluntary Reserves
SEZ
Luanda-Bengo
Timeframe /
How to claim
The incentive is available
for a period between 4 to
10 years and can only be
claimed after submission
and approval of the
investment project.
The incentive can only be
claimed after submission
and approval of the
investment project.
The deduction is divided in
the three years following
the conclusion of the
investment.
• The right to access
Luanda-Bengo SEZ
depends on the
submission of proposal to
the SEZ Management
Company.
• The implementation of
SEZ is subject to certain
requirements.
• Prior interaction with the
authorities and the
Luanda-Bango SEZ is
essential before
investment decisions are
made.
Good to know
Criteria for the granting
of tax benefits:
• Investment amount;
• National jobs creation;
• Investment location;
• Angolan shareholders
participation;
• Domestic value-added;
• Export-oriented
production;
• Agricultural, livestock,
and agro-industries;
• Investment location
(Zone A or Zone B).
Zone A:
Province of Luanda and the
head municipalities of the
Provinces of Benguela,
Huíla and the municipality
of Lobito.
Zone B:
Provinces of Cabinda, Bié,
Cunene, Huambo, Cuango
Cubango, Lunda-Norte,
Lunda-Sul, Moxico, Zaire,
Bengo, Cuanza-Norte,
Cuanza-Sul, Malanje,
Namibe and Uíge and the
other municipalities of the
Provinces of Benguela and
Huíla.
• It is not entirely clear
whether the limits related
to the PIL regarding the
percentage of reduction
and its duration period
should also be applicable
to the extraordinary tax
benefits. We recommend
that this is classified prior
to investment decisions
being effected.
• “APIEX – Angola” since
September 2015, is the
entity responsible for the
promotion of domestic
and foreign investment
projects.
This tax deduction is not
automatic and to obtain this
tax benefit, taxpayers must
submit an application to the
General Tax Administration
before the end of February
of the following year after
the conclusion of the
investment, with
supporting documentation.
Southern Africa: Angola (cont.)
152016 Africa Incentive Survey
Tax incentive
International Financial
Services Centre (IFSC)
Manufacturing
Development Approval
Order
Development approval
orderTax agreements
Minimum
Investment
required
None
Maximum
benefit
available
• A reduced corporate tax
rate of 15% applies to
approved activities.
• No withholding tax on
dividends, interest,
royalties and
management or
consultancy fees paid to
a non-resident.
• Capital gains on
disposal of qualifying
foreign shareholdings
are exempt.
• Dividends from
qualifying foreign
participation are
exempt.
• Investors exempt from
capital gains tax on
divestment.
A reduced corporate tax
rate of 15% and additional
deductions as prescribed
by the Minister.
• The Minister of Finance
may issue a
development approval
order granting additional
relief to any project
which he considers
would be beneficial to
the development of the
Botswana economy or
to the economic
advancement of its
citizens.
• Any order issued will
specify the types and
rates of additional tax
relief to be granted to
the project in question.
• The Minister of Finance
and Development
planning can enter into
an agreement with any
taxpayer.
• Once the agreement is
approved, a reduced tax
rate, additional
deductions and
exemptions prescribed
by the Minister, would
be available.
Type of benefit
Tax reduction, Tax
exemption Tax reduction, Tax deduction
Tax reduction, Tax
deduction, Tax exemption
Training
Benefit
200% tax deduction for approved citizen training, only to the extent to which such expenditure is not entitled to
reimbursement.
Southern Africa: BotswanaThe Ministry of Finance and Development Planning administers manufacturing and development incentives
within Botswana. In this regard, a number of incentives are available, particularly in the manufacturing and
financial sectors.
For further information please contact:
Nigel Dixon-Warren
Tax and Advisory Partner
+267 3912400
162016 Africa Incentive Survey
Tax incentive
International Financial
Services Centre (IFSC)
Manufacturing
Development
Approval Order
Development approval
orderTax agreements
How to claim /
Timeframe
The Company needs to
first apply for certification.
The Company needs
to apply for pre –
approval before it can
claim.
The company needs to apply
for pre-approval before it can
claim.
The agreement has to be
approved by resolution of
the National Assembly.
Good to know
Certification is dependent
on the level of
participation of citizens in
management and training
of citizen employees.
The order is issued on
condition that business
has to contribute to
economic
development and up-
skilling of citizens. If
conditions of the order
are breached the
Minister may amend or
revoke the
development approval
order.
The economic significance of
the project is a major
determining factor in the
award of a Development
Approval Order. In addition,
consideration will be given to
the plans or facilities in place
for the training of citizens
and localisation plans of non-
citizen held positions.
The agreement can only
be amended or cancelled
by the National Assembly.
Southern Africa: Botswana (cont.)
The Financial
Services sector
has specific
incentives
available for
investors in
Botswana,
Morocco, Kenya
and Mauritius.
172016 Africa Incentive Survey
Tax incentive
Tax Allowances
Export Processing Zones (EPZ)Claimed once-off Claimed Annually
Minimum
Investment required None.
Maximum benefit
available
Initial allowances
Initial allowances are available on
capital expenditure during the year of
acquisition at the following Rates:
(i) Industrial buildings,
improvements, railway line 10%
(ii) Farm fencing 33.33%
(iii) Machinery 20%
(iv) Automobiles forming part of a
commercial hire fleet 20%.
Investment allowances
• There is also an additional of 15%
allowance for investment in
designated areas of the country.
• Loss carry forward of up to six
years.
• Manufacturing companies may
also deduct operating expenses
incurred up to 25months prior to
the start of the operations.
• There is also duty draw back when
dealing in non-traditional exports
for all raw materials including
packaging when registered with
Malawi Export Promotion Council.
Annual allowances
Annual allowances are available for
qualifying assets on a declining
balance basis at the following
Rates:
• Industrial buildings, farm
improvements & railway lines
5%
• Farm fencing 10%
• Heavy machinery and
installations 15%
• Light machinery 10%
• Trucks and tractors 33.33%
• Light commercial vehicles
25%
• Motor vehicles 20%
• Commercial Buildings costing
more than K100 million 2.5%
Export allowance
A registered exporter, shall in
every financial year during which
he exports products of Malawi, be
entitled to an income tax
allowance of 25 percent of his
taxable income derived from his
export sales.
• Capital Equipment and raw
materials are duty free.
• No excise tax is imposed on
purchase of raw materials
and packaging materials
made in Malawi.
• No Value Added Tax, to
enjoy this you need to be
operating in the designated
areas.
Southern Africa: MalawiMalawi introduced a one stop incentive platform known as Malawi Investment Trade Centre (“MITC”) where
investors can go and get hold of all information on incentives available in Malawi. MITC collaborates with
Ministry of Trade and Industry including other parastatal organizations like the Malawi Revenue Authority
(“MRA”).
For further information please contact:
Jimmy Gonndwe
Partner, Tax
+265 (1) 773 855/392
182016 Africa Incentive Survey
Tax incentive
Tax Allowances
Export Processing Zones (EPZ)Claimed once-off Claimed Annually
Minimum
Investment required None.
Maximum benefit
available
Transport allowance
An additional allowance may be
granted of 25 percent of the
international transport costs
incurred by a taxpayer for his
exports whether produced by
manufacturing in bond or
otherwise, but other than exports
of products specified in the
Schedule to the Export Incentives
(Exclusion) Order made under the
Export Incentives Act.
Mining allowance
A person carrying on mining
operations incurs mining
expenditure in any year of
assessment shall be entitled to an
allowance equal to 100 percent of
such expenditure in the first year
of assessment
Type of benefit Tax deduction
Training Benefit None
Good to Know Initial and investment allowance may be claimed once but other incentives are annually claimed.
Southern Africa: Malawi (cont.)
192016 Africa Incentive Survey
Tax incentive
Smart Cities Scheme
(SCS)
Global Business
Companies Category 1
(GBC 1)
Global Business
Companies Category
2 (GBC 2)
Freeport Zone
Minimum
Investment
required
None
Maximum
benefit
available
• Exemption from
CIT for 8 years from the
issue of the SCS
Certificate;
• Exemption from VAT on
capital goods;
• Exemption from customs
duty on import or
purchase of any dutiable
good;
• Exemption from transfer
tax and registration duty
on transfer of land to a
SPV subject to certain
conditions; and
• Exemption from Capital
Gains (morcellement)
tax.
• A GBC1 flat CIT rate
of 15%. However, a
deemed foreign tax
credit of 80% is
available against the
Mauritian tax liability
so that a GBC 1 will
pay a net effective tax
rate of 3% only.
• A GBC1 may also
claim actual foreign
tax credit suffered,
subject to meeting
certain conditions,
which may reduce its
effective tax rate to
nil.
• Exemption from
CIT.
• No requirement to
file corporate tax
return.
• Exemption from CIT except
for sale to local market.
• Exemption from customs
duties on all goods
imported into the Freeport
zone.
• Free repatriation of profits.
Type of benefit Tax exemption Tax reduction Tax exemption
Training
BenefitNone
Good to know
• The Incentive is effective
as from 12 June 2015
• The Smart City Scheme
provides an enabling
framework and a package
of attractive fiscal and
non-fiscal incentives to
investors for the
development of smart
cities across the island.
GBC1 can avail the
double taxation treaty
network Mauritius has
with other countries,
including that of the
Southern African
Development
Community (SADC).
GBC2 cannot avail
Mauritius treaty
network.
Mauritius also benefits from
trade agreements such as the
Interim Economic Partnership
Agreement (EPA), the
Generalized System of
Preferences (GSP) and the
Africa Growth & Opportunity
Act (AGOA), which provide
preferential access for goods
of Mauritian origin to the
European Union and the
United States, respectively.
Southern Africa: MauritiusSome of the government incentives include a single corporate income tax rate (“CIT”) of 15 percent;
exemption from customs and excise duties on import of equipment and raw materials; exemption from tax
on payment of dividends, no capital gains tax; a low 5% registration duty on registration of notarial deeds;
free repatriation of profits, dividends, and capital; and reduced tariffs for electricity and water for vulnerable
people.
For further information please contact:
Wasoudeo Balloo
Partner, Tax
+230 406 9891
202016 Africa Incentive Survey
Tax incentive
Foreign or
National
General
Investment
Basic Infra-
structure
Manufacturing
and Assembly
Industry
Agriculture
and Fishing
Hotel and
Tourism
Large
Dimension
Projects
Special
Economic
Zones
Industrial
Zones /
Freeports
Minimum
Investment
required
MZN
2,500,000
(1 USD =
49.0900 MZN)
MZN
2,500,000
Annual turnover
over MZN
3,000,000 and
add value to the
product of more
than 20%
MZN
2,500,000
MZN
2,500,000
MZN
12,500,000
MZN
2,500,000
MZN
2,500,000
Maximum
benefit
available
• Accelerated
depreciation
(more than
50%) for
eligible
assets;
• Tax credit of
5%-10%
of the
investment;
and
• Exemption
for customs
duties and
VAT on K
class
equipment.
• CIT
reduction:
80% on the
first five
years- 60%
between
sixth and
tenth year-
25%
between
eleventh to
fifteenth
year.
• Exemption
for customs
duties and
VAT on K
class
equipment.
Exemption of
customs duties
of material
necessary for
the production
or assembly,
including raw
material.
• CIT
reduction:
80% until
31
December
2015- 50%
between
2016 to
2025.
• Exemption
for customs
duties and
VAT on K
class
equipment.
• Accelerated
depreciation
(more than
50%) for
eligible
assets;
• Tax credit of
5%-10% of
the
investment;
• Exemption
for customs
duties and
VAT on K
class
equipment
plus other
equipment
necessary
for the
project
• Accelerated
depreciation
(more 50%)
for eligible
assets;
• Tax credit of
5%-10% of
the
investment
done;
• Exemption
for customs
duties and
VAT on all
equipment
necessary
for the
project.
• CIT
reduction:
exemption
on the first
five years-
reduction of
50%
between
sixth and
tenth years-
reduction of
25% for the
rest of the
project life.
• Exemption
for customs
duties and
VAT on
equipment
necessary
for the
project.
• CIT
reduction:
exemption
on the first
ten years-
reduction of
50%
between
eleventh
and
fifteenth
years-
reduction of
25% for the
rest of the
project life.
• Exemption
for customs
duties and
VAT on
equipment
necessary
for the
project
including
goods and
materials.
Type of
benefitTax deduction
Southern Africa: MozambiqueThe incentives are authorized by a Government entity, Centro de Promoção de Investimentos (CPI). The
government entity, GAZEDA, is responsible for the approval for Special Economic Zones (“SEZ”) and
Industrial Freeports/Zones (“IFZ”). A number of incentives are available depending on the investment sector
and location.
For further information please contact:
Yussuf Mahomed
Partner
+258 21 355 200
212016 Africa Incentive Survey
Tax incentive
Foreign or
National
General
Investment
Basic Infra-
structure
Manufacturing
and Assembly
Industry
Agriculture
and Fishing
Hotel and
Tourism
Large
Dimension
Projects
Special
Economic
Zones
Industrial
Zones/
Freeports
Training
Benefit
Training
costs up to
5%-10% of
the taxable
profit.
NoneTraining costs up to 5%-10% of the
taxable profit.None
Good to
know
• Need to
apply for
pre-
approval
before
company
can claim.
The
process
takes
around 3
months.
• Benefits
valid for 5
years.
• Need to
apply for pre-
approval
before
company can
claim. The
process
takes around
3 months.
• The benefit
is available
for 5 years
for the
customs
duties and 15
year for CIT.
• Need to apply
for pre-
approval
before
company can
claim. The
process takes
around 9
months.
• Benefit is
available for
the project
period.
Need to
apply for
pre-
approval
before
company
can claim.
The
process
takes
around 6
months.
Need to
apply for pre-
approval
before
company can
claim. The
process
takes around
9 months.
Need to
apply for pre-
approval
before
company can
claim. The
process
takes around
12 months.
• Need to apply for pre-
approval before company
can claim. The process
takes around 6 months.
• GAZEDA is the approving
entity.
Southern Africa: Mozambique (cont.)
In 2014, South
Africa attracted the
most number of FDI
projects by project
numbers - with 116
FDI projects. (Ref 3)
222016 Africa Incentive Survey
Tax incentive
Export Processing Zone (EPZ) Tax
Incentives
Registered Manufacturers Tax
Incentives
Exporters of manufactured goods
Tax Incentives
Minimum
Investment
required
None
Maximum
benefit
available
• Exemption from: VAT, CIT, Stamp
and Transfer duty, Customs and
Excise duty, No duty or tax on any
goods exported from Namibia;
and
• Exemption from import VAT
charged on the import of raw
materials and machinery used in
the manufacturing process.
• An additional 25% deduction on
any expenditure incurred directly
in the manufacturing process;
• An additional 25% deduction of
transportation cost incurred by
road or by rail;
• Building allowance of 20% in the
first year and the balance at 8%
per year over the ensuing 10
years; and
• An additional 25% deduction of
expenditure incurred as a result of
marketing for exportation
purposes.
A deduction of 80% of taxable
income (excluding the exporting of
fish and meat products).
Type of benefit Tax exemption Tax deduction
Training
Benefit
75% refund of expenditure incurred
in training Namibian citizens.
An additional deduction of 25%
from income will be allowed on
approved technical training
expenses.
None
Good to know
• Tax incentives are of unlimited
duration.
• No strikes or lock-outs are
allowed in an EPZ thus the
enterprises should enjoy industrial
calm. EPZ enterprises are allowed
to hold foreign currency accounts
in local banks and they are free to
locate their operations anywhere
in Namibia.
• Tax incentives are limited to the
period the enterprise retains its
manufacturing status.
• A physical inspection of the
premises is required before
manufacturing status can be
granted.
Registration with authorities is
required.
Southern Africa: NamibiaAll manufacturing and Export Processing Zones (“EPZ”) enterprises claiming incentives must register with
the Ministry of Trade and Industry and in terms of taxation incentives, and the entities are also required to
register with the Namibia Inland Revenue Authority ("NIRA").
For further information please contact:
Adeline Beukes
Senior Manager, Tax
+264 61 387 500
232016 Africa Incentive Survey
Southern Africa: South AfricaThe South African government has introduced a range of generous incentives, from tax incentives (see
Table 1 below) to financial grants (see Table 2 below), covering diverse activities primarily in the area of
manufacturing, infrastructure and research and development (“R&D”) projects.
The Department of Trade and Industry (“DTI”) administers the manufacturing and development incentives
and provides grant funding to applicants. The R&D Tax Incentive is administered by the Department of
Science and Technology (“DST”) and the South African Revenue Service (“SARS”) to increase private sector
investment and conducting of R&D in the country. South Africa also has a long history of supporting the
Automotive Industry (both manufacturing of vehicles and components), through a range of cash grants and
rebates (more details are available on request in this regard).
For further information on the full range of tax / incentives, please contact:
Mohammed Jada
Partner, Head of R&D Tax and Incentives
+2782 719 5531
Tax Incentives (Table 1)
Research and
Development
(“R&D”) Tax
Incentive
(Section 11D)
Greenfield and
Brownfield
Expansion
projects
(Section 12I)
Special Economic
Zones
Energy Efficiency Tax
Deduction
(Section 12L)
Employment Tax
Incentive
Minimum
Investment
required
None
Greenfield projects:
• R50 million.
Brownfields:
• R30 million; or
• Lesser of
R50 million; or
25% of
expenditure on
existing assets.
None, however
project needs to be
located in a
designated SEZ.
None
None, but need to be an
employer duly registered
for Pay As You Earn
(“PAYE”) and must
employ employees
earning between R2 000
to R6 000 per month.
Maximum
benefit
available
Unlimited
benefit. 150%
tax deduction on
qualifying
expenditure at a
corporate tax rate
of 28%. This is
effectively an
additional 14%
tax saving on
qualifying
expenditure with
no upper cap or
limit on the
allowed
expenditure.
R98 million to
R252 million net
tax benefit.
15% corporate tax
rate, accelerated 10
year allowance on
buildings, VAT and
Customs relief and
the Section 12I tax
incentive is available
as well as an
employment tax
incentive to hire more
people.
The deduction is
calculated at 95 cents
per kilowatt hour of
energy efficiency
savings or energy
efficiency savings
equivalent.
• Reduction in 50% of
PAYE during each
month of the first 12
months in respect of
which an employer
employs a qualifying
employee; and
• Reduction in 25% of
PAYE during each of
the 12 months after the
first 12 months that the
same employer
employs the qualifying
employee.
242016 Africa Incentive Survey
Southern Africa: South Africa (cont.)Tax Incentives (Table 1 – continued)
Research and
Development
(“R&D”) Tax
Incentive
(Section 11D)
Greenfield and
Brownfield
Expansion
projects
(Section 12I)
Special Economic
Zones
Energy Efficiency
Tax Deduction
(Section 12L)
Employment Tax Incentive
Type of benefit Tax deduction
Training Benefit Not applicable.
R36 000 per
employee up to a
maximum of
R30 million.
None
How to claim /
Timeframe
From 1 October
2012, the
effective 14%
tax saving can
only be claimed
from the date a
pre – approval
application form
has been lodged
with the DST.
A Company needs
to submit an
application, which
must be approved
before contracting
for or acquiring any
assets.
The SEZ Act was
promulgated on 9
February 2016, and is
currently effective.
The energy
efficiency savings
have to be
measured and
confirmed by a
certified and
accredited body.
The incentive is available
from 1 January 2014 to 31
December 2017.
Good to know
The time frame
for pre – approval
from date of
lodgement is
generally about 9
months, with
expenditure
qualifying from
the date of
lodgement of the
pre – approval
application to the
DST.
The time frame for
approval from date
of lodgement is
generally at least 2 -
3 months.
Various zones have
been identified
across South Africa:
• Dube Trade Port;
• Richards Bay;
• Saldanha Bay;
• Atlantis;
• Upington;
• Harrismith;
• Johannesburg (x2);
• Rustenburg;
• Tubatse;
• Port Elizabeth;
• East London; and
• Messina.
• No deduction is
allowed if the
taxpayer receives
a concurrent
government
benefit in respect
of energy
efficiency
savings; and
• A deduction for
captive
renewable energy
is only allowed
under section 12L
if the kilowatt
hours of energy
output of the
respective captive
power plant is
more than 35%
of the kilowatt
hours of energy
input in respect of
that year of
assessment.
• Eligible employers must
employ qualifying
employees who are
between 18 to 29 years old
at the end of the month
the incentive is claimed,
and who have South
African Identity documents
or asylum seeker permits;
and
• Age limit is not applicable if
the employee renders their
services to an employer
who operates in a SEZ.
“Global economic conditions are affecting all countries and in an increasingly inter-connected
world, no country is immune from its effects. South Africa remains an attractive investment
destination that is open for business”
— Minister Rob Davies
in the article “South Africa open for business”, published by The Public Sector Manager, February 2016
252016 Africa Incentive Survey
Southern Africa: South Africa (cont.)Government Grants (Table 2)
Aquaculture
Development and
Enhancement
Programme (“ADEP”)
Critical Infrastructure
Program (CIP)
Business Process
Services (BPS)
(e.g. call centre / shared
services)
Film Incentive
Minimum
Investment
required
None, but need to
conduct activities that fall
under the Standard
Industry classifying code
(SIC) 132 (fish hatcheries
and fish farms) and SIC
301 and 3012 (production,
processing and
preserving of aquaculture
fish).
None
Create at least 50 new
jobs in South Africa over a
three year period and
maintain the jobs for a
period of five years.
• R 12 Million for foreign
Films.
• R 2.5 Million for South
African Films.
Maximum
benefit
available
The grant ranges
between 25% and 45%
of the cost for a new,
upgrade or expansion
project (based on a point
scoring system), capped
at R40 million.
Cash grant of between
10% to 30% of
investment, Capped at
R30 million.
• Average cash incentive
of R22 000 to R34 000
per job retained (2014
to 2023).
• 20% bonus if more than
greater than 400 but
less than 800 jobs
created.
• 30% bonus if more than
greater than 800 jobs
created.
20% - 50% of production
expenditure and up to
5%- 25% of Post
production Expenditure.
Capped at R50 million.
Type of benefit Cash grant
Training
BenefitNone
Good to Know
• Claim application must
be submitted to the DTI
at least 2 months
before commencement
of operations, for grant
to be disbursed.
• Projects will be granted
an incentive payment
and disbursement
period based on their
investment spread as:
(i) Projects with a
proposed one year
investment are granted
an incentive, and
disbursement over two
six monthly periods
(ii) Projects with a
proposed two year
investment are granted
an incentive payment
and disbursement over
four six monthly
periods.
• Applications must be
submitted 3 months
before start of
construction of
infrastructures; and
• Incentive applies to
both mining and
manufacturing
industries.
• Applicants claim is
linked to a scorecard,
measuring level of
investment and
percentage of black
ownership.
• Must commence
commercial BPS
operations no later than
six months from the
approval date.
• The 50 new jobs
created must be
retained.
• The incentive consists
of three categories:
– Foreign Film and
Television Production
and Post-Production
incentive;
– South African Film
and Television
Production and Co-
Production incentive;
and
– South African
Emerging Black
Filmmakers incentive.
• Applications must be
submitted before
commencement of
principal photography
or post production.
262016 Africa Incentive Survey
Southern Africa: SwazilandSwaziland does not offer cash grants to companies, but has put in place a relatively competitive incentive
package. The rationale for incentives is premised on the notion that it eliminates the need for direct
government funding to business, indicates a generous long term environment with a promise of competitive
return to the investor and it offsets the low domestic savings which are oftentimes insufficient to finance
investment expansions. There is no capital gains tax in Swaziland.
For further information please contact:
Rob Webb
Partner
+26824057000
Tax Incentives
Development
Approval Order
(DAO)
Duty free access for
capital goods and
machinery
Rebates for raw
materialBuilding Initial Allowance
Special Economic
Zones
Minimum
Investment
required
None
Royal Science
and Technology
Park and the
King Mswati III
International
Airport have
been earmarked
as SEZ’s.
Maximum
benefit
available
10% maximum
CIT payable for
10 years and no
withholding tax
on dividends
paid. The normal
CIT rate is
27.5%.
Exemption of
equipment and
machinery from
duties (only those
imported for
purposes of
manufacturing or
direct operations).
Exemption from
import duty on
raw material
used to
manufacture
goods to be
exported outside
the Southern
African Customs
Union (“SACU”).
Industrial Building Allowance.
Initial allowance of 50% of
the actual cost of a building,
for the first year and 4%
thereafter.
Type of
benefitTax reduction Tax exemption Tax reduction
Training
BenefitYes None
Good to
Know
The incentive is
available for 10
years and can be
renewed after
the 10 year
period.
• The incentive can be claimed upon
importation by completing certain
documents at the border. Private
clearing agents are also available to
assist taxpayers.
• This incentive is administered under the
SACU Common External Tariff (“CET”)
Framework.
• An application needs to be
submitted to the Swaziland
Revenue Authority (“SRA”)
on commencement of the
project. An inspection of
the completed project will
be conducted by SRA.
• Similar allowances are
available for hotel buildings
and plant and machinery
used in a manufacturing
process.
Government is
currently working
on the legislation
to ratify these
areas and the
additional
benefits to be
made available.
272016 Africa Incentive Survey
Tax incentive
ZDA investment incentivesSpecial Economic Zones
(Industrial Zones/Freeport's)Industry Specific Incentives
Minimum
Investment
required
Currently $500k, (please note that
this may be been increased to
$2.5m per latest proposed
amendment of ZDA bill).
Multi-facility economic zones or
industrial parks are located both in
Lusaka and the Copper belt.
Investment in rural areas also
qualifies for incentives.
None
Maximum
benefit
available
• 0% corporate income tax for 5
years;
• Dividend withholding tax at 0%
for 5 years;
• Improvement allowances of
100% on certain capital
expenditure; and
• The suspension/deferment of
import duties and import VAT on
plant and machinery for 5 years.
ZDA incentives as described across
are only available in the approved
multi-facility economic zones,
industrial parks or rural areas.
• 10% corporate income tax rate
(35% standard rate) and
increased capital allowances;
• The export of non-traditional
goods benefits from a 15%
corporate income tax rate;
• The manufacture of certain
fertilizers benefits from a 15%
corporate income tax rate; and
• Rural enterprises benefit from a
30% corporate income tax rate
for the first 5 years.
Type of benefit Tax reduction
Training
BenefitNone
Good to Know
In order to claim these, the investment must initially be approved by the Zambia Development Agency, and then
confirmed by the Zambia Revenue Authority. The incentives are available for 5 years from the commencement of
the business.
Please also note that companies listed on the Lusaka Stock Exchange can benefit from slightly reduced corporate
income tax rates in the year after listing, provided that certain conditions are met.
Southern Africa: Zambia Fiscal and non-fiscal incentives are available for investors in specific 'priority sectors' (currently
manufacturing, infrastructure development and energy and water development) where the investments are
made in an industrial area, rural area or multi-facility economic zone. These incentives are available for certain
sizes of investments which receive approval from the Zambia Development Agency (“ZDA”).
For further information please contact:
Michael Phiri
Partner
+ 260 211 372900
282016 Africa Incentive Survey
Southern Africa: Zimbabwe Investment incentives in Zimbabwe are outlined in the Income Tax Act [Chapter 23:060, and the rates are
outlined in the Finance Act [Chapter 23:04]. The incentives are administered by the Commissioner General, of
the Zimbabwe Revenue Authority (“ZRA”). Incoming investments have to be registered by the Zimbabwe
Investment Centre (“ZIC”). Currently Zimbabwe is working towards developing an SEZ regime but this is still
in a very preliminary phase.
For further information please contact:
Steve Matoushaya
Partner
+2634302600
Tax Incentives (Table 1)
Build, own, operate
and transfer (BOOT or
BOT)
Industrial Park
Developer
Tourist development
zonesManufacturing exporter
Minimum
Investment
required
None, but usually
encompasses large scale
construction projects
such as construction of
roads, infrastructure, etc.
None, but needs to
operate in an approved
industrial park.
None, but needs to
operate in tourist
development zone.
None, but needs to
conduct manufacturing
operations in Zimbabwe
and, in any year of
assessment, 30% or more
of its total manufacturing
output is exported from
Zimbabwe.
Maximum Benefit
available
The rate of tax for BOOT
or BOT operations is 0%
in the first five years,
15% in respect of the
second five years and
then 25% thereafter.
Taxed at 0% in first five years and 25% thereafter.
Company which exports
between 30% to 41% of
its output will be taxed at
the preferential rate of
20%. If the Company
exports more than 41%
but less than 51% , the CIT
rate drops to 17.5%; If the
company exports more
than 51%, then the CIT
rate comes down to 15%.
Type of benefitTax reduction Tax exemptions, Tax reduction Tax reduction
Training Benefit None
Good to know
An approved BOOT or
BOT arrangement is a
contract / arrangement
approved by the
Commissioner-General,
to construct an item of
infrastructure for the
state or a statutory
corporation, and the right
to operate or control it
for a specified period,
(after which period the
ownership or control is
transferred or restored to
the state or the statutory
corporation).
“Industrial park” means
any premises or area
which is approved by the
Minister by statutory
instrument and in which
two or more persons,
independently of the
industrial park developer,
carry on the business of:
manufacturing or
processing goods for
export from Zimbabwe;
or manufacturing or
processing components
of goods which are
intended for export from
Zimbabwe.
An “approved tourist
development zone”
means a tourist
development zone
declared under
regulations made in
terms of section 57(2)
(k) of the Tourism Act
[Cap. 14:20] and
approved by the
Commissioner-
General.
Percentages of a
company’s manufacturing
output are calculated by
quantity or volume rather
than according to value.
Eastern Africa
Mount
Kilimanjaro
Tanzania
302016 Africa Incentive Survey
Tax incentive
The Investment code (Regime A and Regime B) Special regime applicable to Free zone companies
Minimum
Investment
required
• Minimum investment amount : 5.000.000 FDj
(~ 28 000 US$) to benefit from the regime A.
• Minimum investment amount : 50.000.000 FDj
(~ 281 000 US$) to benefit from the regime B .
None
Maximum
Benefit
available
REGIME A :
• Exemption from domestic consumption tax on the
materials and equipment necessary for the realisation
of the investment program as well as imported raw
materials and those used effectively during the first
3 years by the approved company.
REGIME B:
• Exemption from land tax for construction of buildings
for a period of 7 years;
• Exemption from tax on business profits resulting from
the approved activities, subject to a maximum of 7
years;
• Exemption from domestic consumption tax for raw
materials imported and used in the first year; and
• Authorized investments pursuant to provisions of Plan
B may be exempt from the tax on building permits.
• The companies and operators individual operating in
free zones are not subject to any direct or indirect tax
or taxation including income tax, except in respect of
VAT. For VAT purpose the entities of the free zone
are subject to the provisions of the General Code
taxes.
• Goods imported or manufactured in the free zone are
exempt from all customs and tax liability, unless they
are imported into the customs territory of the
Republic of Djibouti. Thus, the flow in the local
market of goods from the free zone is subject to the
payment of duties and taxes due on importation.
Type of benefit Tax exemption
Training Benefit None
Good to know• Need to apply for pre-approval before company can
claim.
• Need to apply for pre-approval before company can
claim
• The company has to apply for the free zone license
during its incorporation, so it can benefit from all the
advantages.
• This tax exemption is granted for a period of up to 50
years, which run from the date of issuance of the free
zone license.
• Conditions: The Company has to export at least 80%
of its production. The benefits of this regime remain
valid for a period of 25 years and can be renewed.
Eastern Africa: DjiboutiThere are various tax incentives put in place by the government of Djibouti to stimulate investment.
For further information please contact:
Ndiaga Sarr
Senior Partner
+221338492705
312016 Africa Incentive Survey
Tax incentive
Income Tax HolidaysRegional Income Tax
deductions
Non Fiscal (Export)
Incentives
Customs Duty
Exemptions
Minimum
Investment
required
None, but an investor
must be engaged in
manufacturing,
agribusiness;
generation,
transmission and
supply of electrical
energy; and ICT.
None, but an investor must
establish a new enterprise
in one of the following
regions:
Gambella; Benshangul/
Gumuz; Afar; Somali; Guji
and Borena Zones (in
Oromia); or
South Omo Zone, Segen
(Derashe, Amaro, Konso
and Burji) Area Peoples
Zone, Bench-Maji Zone,
Sheka Zone, Dawro Zone,
Keffa Zone, Konta and
Basketo Special Woredas
(in Southern Nations,
Nationalities and Peoples
Region).
None, but must be
designated as either a
‘producer exporter’,
‘indirect producer
exporter’, ‘raw material
supplier’ and ‘exporter’.
• None, but all foreign
investors in Ethiopia are
required to invest at least
US$ 200,000 (or an
equivalent amount in
Ethiopian birr at the
prevailing exchange rate)
in a single investment
project; and
• Investor must be
engaged in
manufacturing,
agribusiness, generation,
transmission and supply
of electrical energy; and
ICT.
Maximum
benefit
available
Income tax
exemptions for a
period ranging
between 1 and 9
years, depending on
the specific activity
and the location of the
investor.
30% income tax deduction
for three consecutive years
after the expiry of the tax
holiday period, as shown
on the left hand column,
under “Income Tax
Holidays”.
• Qualifying investors are
allowed to import
machinery and
equipment necessary
for their investment
projects through a
suppliers’ credit.
100% exemption from
customs duties and other
taxes levied on:
• importation of capital
goods and construction
material; and
• imports on spare parts
(the value of which is not
greater than 15% of the
total value capital goods).
Eastern Africa: EthiopiaEthiopia offers a comprehensive set of fiscal and non-fiscal incentives to encourage investment into priority
areas and industries, of which investments are regulated by the Ethiopian Investment Agency (EIA). The
incentives are applicable to both domestic and foreign investors. Industries applicable for incentives include,
but are not limited to, Manufacturing, Agro-industries, ICT, Textiles, Timber, Chemical and Pharmaceutical,
Food and Minerals. Non- fiscal incentives are given to all investors who produce export products.
For further information please contact:
Robert Waruiru
Director, Tax
+25 420 280 6000
322016 Africa Incentive Survey
Tax incentive
Income Tax HolidaysRegional Income Tax
deductions
Non Fiscal (Export)
Incentives
Customs Duty
Exemptions
Type of benefit Tax exemption Tax deductionSuppliers Credit, Tax
exemption Customs Duty Exemption
Good to Know
• Companies that
incur losses during
the income tax
holiday period are
allowed to carry
forward such losses
for half of the
income tax holiday
period after the
expiry of the holiday
period, however the
period may not
exceed a 5-year
income tax period.
• The tax holidays
may be extended
for an additional
period of 2 years
subject to meeting
certain export
requirements.
An investor who expands
or upgrades his existing
enterprise and increases its
production or service
capacity by at least 50%,
or introduces a new
production or service line
at least by 100% percent
of an existing enterprise,
may be entitled to the
income tax exemption on
the left hand column,
under “Income Tax
Holidays”.
Business enterprises that
suffer losses during the
income tax exemption
period can carry forward
such losses, following the
expiration of the income
tax exemption period, for
half of the tax exemption
period but up to a
maximum of 5 years.
• Although no particular
time frames are given for
approval, approvals must
be obtained in advance
before such importation
of duty free goods.
• The incentive is available
for the importation of
spare parts is limited to a
period of 5 years.
Eastern Africa: Ethiopia (cont.)
Africa accounted
for the largest
number of
regulatory
policy reforms in
2014, with 75 of
the 230 policy
reforms
worldwide
coming from
Africa.
Reference 3 : see Page 65
332016 Africa Incentive Survey
Tax incentive
Export Processing
Zones (EPZ)
Special Economic Zones
(SEZ)
Nairobi Stock Exchange
(NSE) listing incentive
Investment Deduction
(ID)
Minimum
Investment
required
None, but need to be
located in a designated
EPZ.
None, but need to be
located in a designated
SEZ.
20% issued shares.
• 100% ID no minimum
investment is required.
• 150% ID in an area
outside major cities and
a minimum investment
of KES 200 million is
required.
Maximum
benefit
available
• 10 year corporate tax
holiday and 25% tax
rate for next 10 years.
• 10 year withholding tax
holiday on dividends
and other remittances
to non-residents.
• Exemption from VAT
and customs import
duty on inputs and
stamp duty.
• Exemption from VAT
registration.
• Exemption from
payment of excise duty.
• 100% investment
deduction on new
buildings and machinery
within the EPZ.
Exemption from
Corporation tax, VAT,
import duties and excise
duty.
Corporate tax rate at 20%
for first 5 years after
listing 40% or more
issued shares.
150% Deduction on
qualifying cost of
investment.
Type of benefitTax exemption, Tax
reductionTax exemption Tax reduction Tax deduction
Training
Benefit
Taxpayers registered with the National Industrial Training Authority (NITA) contribute monthly Industrial Training
Levy and are entitled to a reimbursement of training costs so long as the training is carried out by NITA Certified
Trainers.
Eastern Africa: KenyaKenya provides a number of incentives, especially for investors in the manufacturing sector. However, the
recently enacted Special Economic Zone Act extends incentives to other sectors including services which are
established in designated zones.
For further information please contact:
Richard Ndungu
Partner and Head of Tax
+25(20) 280 6000
342016 Africa Incentive Survey
Tax incentive
Export Processing
Zones (EPZ) Special Economic Zones
(SEZ)
Nairobi Stock Exchange
(NSE) listing incentive
Investment Deduction
(ID)
Timeframe 10-20 years. None3 – 5 years depending on
listed shares.None
Good to Know
• Manufacturing,
commercial or service
activities may be
undertaken in an EPZ.
• May be 100% foreign
owned.
• Licensing of EPZ done
by EPZ Authority of
Kenya.
The enabling legislation is
effective from
15 December 2015.
• Company that lists 20%
issued shares enjoy
27% corporate tax for
the first three years.
• Company that lists 30%
issued shares enjoy
25% corporate tax for
first five years.
• Company that lists 40%
issued shares enjoy
20% corporate tax for
first five years.
• Available to qualifying
investments
(infrastructure or
development).
• Investments located
within Nairobi,
Mombasa, Kisumu and
below KES 200 million
qualify for 100%
deduction.
Eastern Africa: Kenya (cont.)
352016 Africa Incentive Survey
Eastern Africa: RwandaTo attract more foreign and local investors in Rwanda, the Agency of Investment, called the Rwanda
Development Board (RDB), in partnership with the Government of Rwanda has recently published (in 2015) in
the Official Gazette of the Republic of Rwanda, the new Regulating Investment Promotion and facilitation
(Investment code), which contains a package of investment incentives to foreign as well as local investors.
For further information please contact:
Angello Musinguzi
Senior Manager
+ 250 252 579 790 or +250788507695
Tax Incentives
Preferential
corporate
income tax
rate of zero per
cent (0%)
Preferential
corporate
income tax rate
of fifteen percent
(15%)
Corporate income
tax holiday of up to
seven (7) years
Corporate
income tax
holiday of up to
five (5) years
Special Economic Zones
(Industrial Zones/
Freeports)
Minimum
Investment
required
An international
Company with
headquarters or
regional office in
Rwanda,
fulfilling
investment
requirements
such as to
invest
10,000,000
USD, provide
employment to
Rwandans,
conduct
international
financial
transactions of
at least
5,000,000 USD
a year, as well
as others
requirements.
An investor
exporting at least
50% of its
turnover or
investing in one of
the Economic
priority sector,
such as
Information
Communication
Technology (ICT),
Transport, Energy
etc.
An investor
investing at least
50,000 USD and
contributing at least
thirty percent (30%)
of this investment in
form of equity in the
Economic Priority
Sectors, such as
Energy, Tourism,
Health,
Manufacturing, ICT.
Microfinance
institutions
approved by
National Bank of
Rwanda (TBNR)
are entitled to a
tax holiday of five
years from the
time of their
approval, which
may be renewed.
None, but the investor
need to be located in a
designated SEZ (such as
Kigali) investing in products
for Export purposes.
Maximum
benefit
available
Corporate
Income Tax at a
rate of 0%.
Corporate Income
Tax at a rate of
15%.
Tax holiday for a
period of seven(7)
years.
Tax holiday for a
period of five (5)
years.
The investor is exempted
from customs tax for
products used in Export
processing zone, pays
corporate Income tax at a
rate of 0%, exemption from
withholding tax, tax free
repatriation of profit.
362016 Africa Incentive Survey
Eastern Africa: Rwanda (cont.)
Tax Incentives
Preferential
corporate
income tax
rate of zero per
cent (0%)
Preferential
corporate
income tax rate
of fifteen percent
(15%)
Corporate income
tax holiday of up to
seven (7) years
Corporate
income tax
holiday of up to
five (5) years
Special Economic Zones
(Industrial
Zones/Freeports)
Type of benefit Tax reduction
Tax reduction.
VAT refunded within 15
days and benefits of duty
free or free trade zones.
Training
BenefitNone
Timeframe /
How to claim
Application of the incentives is
applied during the registration
process.
Applications must
be submitted 60
days before start of
production.
Application must
be approved by
the National Bank
of Rwanda (BNR).
Effective from 27 May
2015, with the investment
code.
Good to know
All registered
investor shall
not pay capital
gains tax, and all
foreign
investors are
entitled to
immigration
assistance.
The Ministerial Order will come to list all
Specific sectors which will be subjected to
this Incentive.
However, this
period may be
renewed upon
fulfilling conditions
prescribed in the
Order of the
Minister in charge
of finance.
An SEZ was prepared in
Kigali.
372016 Africa Incentive Survey
Tax incentive
Export processing zones (EPZs) Special Economic Zones (SEZ) Other incentives
Minimum
Investment
required
For EPZ User Licence, the
minimum capital is US$ 500,000 for
foreign investors and US$ 100,000
for local investors. The investment
must be new and the project needs
to be located in a designated EPZ.
For SEZ User Licence, the
minimum capital is US$ 500,000 for
foreign investors and US$ 100,000
for local investors.
• Qualifying investments are
investments made in the priority
sectors with an investment
capital amount of above US$
100,000 in the case of local
investors and above US$ 300,000
in the case of foreign investors.
• Special strategic investment
status may be granted to project,
which meet among other criteria
of which, a minimum investment
capital of not less than US$
300,000,000 is required.
Maximum
benefit
available
• Exemption from payment of corporate tax for 10 years;
• Exemption from payment of withholding tax on rent, dividends and
interest for 10 years;
• Reduction of customs duty, VAT and any other tax payable on raw
materials and goods of a capital nature;
• Exemption from payment of all local taxes and levies imposed on goods
and services produced or purchased in the EPZ for a period of 10 years;
• Exemption from VAT on utility and wharfage charges; and
• No stamp duty.
A certificate of incentives
guarantees:
• fiscal stability for a 5-year period,
i.e. protection against adverse
changes in taxation legislation;
and
• the right to transfer outside the
country 100% of profits (including
foreign exchange earned) and
capital.
Type of benefit Tax exemptions Tax reduction Tax reduction
Training
BenefitNone
Eastern Africa: TanzaniaTanzania applies a wide range of tax incentives for both local and foreign investors provided they are
registered in the Tanzania Investment center (TIC) and/or the Tanzania Revenue Authority. The incentives are
structured according to the lead and priority sectors including; Agriculture & Livestock, Tourism,
Manufacturing, Commercial Building, Transportation, Broadcasting and Telecommunication, Natural
Resources, Financial Institutions, Energy, Human Resources Development, Economic/Infrastructure.
For further information please contact:
Nsanyiwa Donald
Senior Manager, Tax and Corporate Services
+255 22 2113343
382016 Africa Incentive Survey
Tax incentive
Export processing zones (EPZs) Special Economic Zones (SEZ) Other incentives
Timeframe /
How to claim
For certain type of taxes, you will need to show the certificate of incentives
issued by the EPZ or SEZ and an application letter in order to claim
exemption. However, for certain tax exemption, there is no pre-approval
requirements.
An application must be submitted
to the TIC.
Good to know
Only holders of licences granted by
the EPZA may:
• Conduct a business or undertake
a retail trade in an EPZ in respect
of any goods manufactured in, or
imported into, such EPZ;
• Remove goods manufactured in
an EPZ for any purpose other
than conveyance to another EPZ
or export into a foreign market, or
for purposes of processing such
goods only; or
• Use goods manufactured in an
EPZ for consumption in such EPZ
or in any other EPZ.
The investment must be new and
the project needs to be located in a
designated SEZ.
The Investment Act (“IA”) provides
for issuance of “certificates of
incentives” to qualifying investors
who have made applications for
such certificates to the TIC.
Eastern Africa: Tanzania (cont.)
392016 Africa Incentive Survey
Eastern Africa: UgandaThe government of Uganda is providing a wide range of tax incentives to businesses to attract greater levels
of foreign direct investment (FDI) into the country. The Government has prioritized building and improving
infrastructure, including boosting energy production, lowered tariffs and trade barriers for regional trade, and
generally welcomes foreign direct investment. The Ministry of Finance, Planning and Economic Development
is responsible for granting tax incentives and exemptions.
For further information please contact:
Peter Kyambadde
Director, Tax
+256 414 340315
Tax Incentives (Table 1)
Agriculture HorticultureEnergy and Natural
ResourcesTraining
Minimum
Investment
required
USD100,000
Maximum benefit
available
• The supply of
livestock,
unprocessed
foodstuffs and
agricultural
products except
wheat grain is an
exempt supply for
VAT purposes.
• The supply of
machinery, tools
and implements for
use only in
agriculture is an
exempt supply
under the VAT Act.
• The supply of
seeds, fertilizers,
pesticides and hoes
is a zero-rated
supply.
20% of the amount of
expenditure on the
establishment or
acquisition of a
horticulture plant or the
construction of a green
house, in the year of
income and in the
following four years
income in which the
plant or green house is
used in the business of
horticulture.
• Licensees for
mining operations
are allowed 100%
deduction of mining
exploration
expenditure.
• Licensees of
petroleum
operations are
allowed 100%
deduction of
exploration and
development
expenditure.
• The supply of power
generated by solar
is an exempt supply
under the VAT Act.
• The supply of goods
and services to the
contractors and sub-
contractors of
hydro-electric power
projects is an
exempt supply
under the VAT Act.
• 100% of training expenditure
incurred during the year of
income on a citizen or
permanent resident who is
employed by the employer in a
business, the income of which
is included in gross income, is
an allowable deduction.
• This allowance should not
exceed five years in
aggregate, and the education
should be relevant to the
person’s employment but not
leading to a degree.
Type of benefit Tax deduction Tax deduction
Tax deductions,
exemptions and
incentives
Tax deduction
Training Benefit Yes
402016 Africa Incentive Survey
Eastern Africa: Uganda (cont.)Tax Incentives (Table 1 – continued)
Agriculture HorticultureEnergy and Natural
ResourcesTraining
How to Claim /
Timeframe
The benefit arises when
the zero-rated or exempt
supply is made.
The benefit is to be
claimed within 5 (five)
years inclusive of the
year of income in
which it was incurred.
It is claimed at a rate
of 20% of the
expenditure per year
over the 5 years.
• The mineral exploration
expenditure, rehabilitation
expenditure,
decommissioning
expenditure, and
petroleum exploration and
development expenditure
is allowed in the year of
income in which it is
incurred.
• The supply of power
generated by solar and
goods and services to
contractors and sub-
contractors of hydro-
electric power projects is
exempt when a supply is
made.
Training expenditure is
limited to training or
tertiary education not
exceeding 5 years in
aggregate for an
employee.
Good to Know
Pesticides packaged for
personal or domestic use
are not zero-rated.
Horticulture includes
propagation or
cultivation of seeds,
bulbs, spores, fungi or
similar things in
environments other
than soil, whether
natural or artificial.
The above deductions and
exemptions are only
available for licensees.
A permanent resident
means a resident
individual who has been
present in Uganda for a
period or periods in total
of five years or more.
412016 Africa Incentive Survey
Eastern Africa: Uganda (cont.)Tax Incentives (Table 2)
Start-up costs
Export Processing
Zone and
Freeports
ManufacturingManufacturing
Continued
Manufacturing
Continued
Minimum
Investment
required
USD100,000
Maximum benefit
available
Expenditure
incurred in starting
up a business is
100% an allowable
deduction. The
allowances are
consumed in four
equal instalments.
• Goods entering
an export
processing zone
or a Freeport are
exempt from
duty.
• The exports are
zero rated under
the VAT Act
which allows the
exporter to claim
VAT incurred in
Uganda in
relation to the
exports.
Income derived
from exportation of
finished consumer
and capital goods
may be exempt for
a period of 10 (ten)
years.
Manufacturing
Under Bond facility
can be extended to
manufacturers to
import plant,
machinery,
equipment and raw
materials tax free,
exclusive for use in
the manufacture of
goods for export.
It’s a 100% tax
incentive.
Drawback of import
duty may be
claimed by an
exporter on
exportation. It’s a
100% tax
incentive.
Type of benefit Tax deduction
Reduced Tax, VAT
and Customs
charges and
benefits of duty
free or free trade
zones.
Tax exemption Tax Incentive Tax Incentive
Training Benefit Yes
How to Claim /
Timeframe
25% of the amount
of expenditure in
starting up the
business in the
year of income the
business is started
up and 25% of the
in the following
three years of
income in which
the business is
carried on.
As long as the licence is still valid
As long as the
Manufacture
remains compliant
with the conditions
given by the
commissioner.
Good to Know
Non-recurring pre-
linear costs such as
registration
charges, legal fees
etc., form part of
the start-up costs.
The Commissioner
has the mandate of
designating areas
that are
export processing
zones or freeports
in which customs
formalities are to
be carried out.
Export means to
take or cause to be
taken out of the
East African
Partner States.
Application for a
licence is in a
prescribed form
and the licence
must be paid for
annually.
Drawback will not
be allowed in
respect of any
goods
where—the import
duty on the goods
was less than one
hundred
dollars.
Northern Africa
Ouarzazate
Solar Power
Plant in
Morocco
432016 Africa Incentive Survey
Northern Africa: AlgeriaIn Algeria, investment projects carried out in activities of manufacturing and/or services may benefit from tax
exemption and/reduction according to the nature of the project, its location, and impact on economic and
social development. Other incentive's were also introduced by Finance Law 2015 for certain industrial
activities.
For further information please contact:
Ouali, Ramzi
Partner, Diversified Industries
+213982400877
Tax Incentives
The general tax
regime
Investment in
development
Zone
Investment of
particular interest
for the national
economy
(convention)
Residents of
Illizi, Tindouf,
Adrar or
Tamanghasset
Hydrocarbon
activities
Employment
creation
incentives
Minimum
Investment
required
None
None, but must
be located in IIIizi,
Tindouf, Adrar or
Tamanghasset.
None
Investment
project needs
to create 100
Jobs.
Maximum
benefit
available
Realisation
period:
• Exemption
from customs
duties on non-
excluded
imported
equipment;
• Exemption
from VAT on
non-excluded
goods and
services; and
• Exemption
from property
transfer tax in
return for all
property
acquisitions.
Exploitation
period:
• Exemption
from company
profits tax; and
• Exemption
from
Professional
activity tax (tax
of 2% on the
turnover).
Realisation
period :
• Exemption from
transfer tax on
real estate
acquisitions;
• Exemption from
VAT on goods
and services;
and
• 5% reduced
customs duty on
imported goods
directly for the
project.
Exploitation
period
• Exemption from
CIT for 10 years;
• Exemption from
Professional
activity tax; and
• Exemption from
property tax on
developed land
for 10 years.
Realisation period:
• Exemption from
duties and taxes
on all goods and
services that are
necessary for the
realisation of the
investment; and
• Exemption from
property tax on
real estate.
Exploitation
period:
• Exemption from
CIT for 10 years;
• Exemption from
Professional
activity tax; and
• Other benefits
upon decision of
the National
Council of
Investment.
50% reduction in
CIT for 5 years
Upstream activities
• Exemption from
VAT on goods and
services, intended
for use in the
exploration of
hydrocarbons; and
• Exemption from
customs duties;
and
• Exemption from
CIT.
Downstream
activities
• Exemption from
VAT on goods and
services, and
• Exemption from
customs duties on
the importation of
equipment,
materials and
products intended
for use in relevant
activities relating to
pipeline
transportation, gas
liquefaction and
the separation of
liquefied petroleum
gases.
Exemption
from CIT
when creating
up to 100
employment
positions;
442016 Africa Incentive Survey
Northern Africa: Algeria (cont.)
Tax Incentives
The general tax
regime
Investment
in
development
Zone
Investment of
particular
interest for the
national
economy
(convention)
Residents of
Illizi, Tindouf,
Adrar or
Tamanghasset
Hydrocarbon
activities
Employment
creation
incentives
Type of
benefitTax exemption, Tax reduction. Tax reduction Tax exemption
Training
BenefitNone
Good to
Know
• Investments
exceeding
equivalent 20
million are
subject to pre-
approval from the
CNI.
• Beneficiaries
who receive
exemptions or
reductions for all
taxes, are
required to
reinvest the
percentage of
profits
corresponding to
exploitation
period.
• Failure to respect
this obligation
results in
repayment of the
tax benefit and
the application of
a tax penalty of
30%.
Pre-approval
from the CNI for
all investments
is required.
Investment
needs to
contribute to
environmental
protection and
Natural
resources, Safe
Energy or
Sustainable
development.
Mining
companies
which are
established in
this area are no
longer entitled
to the 50%
reduction of
corporate
income tax.
Activities other
than those
relating to
research and
exploitation (e.g.
transportation
by pipeline,
refining,
hydrocarbon
processing,
marketing,
storage and oil
distribution) are
entitled to other
tax incentives,
but are still
subject to the
general tax
regime.
The exemption
period is
increased to 5
years when
more than 100
employment
positions are
created.
452016 Africa Incentive Survey
Tax incentive
Tax reduction for investmentsExemption for reinvested capital
gainsIncentives for new companies
Minimum
Investment
required
Minimum 60 Million FCFA.
N/A N/A
40% of the invested amounts shall
be deducted from the taxable base
for personal income tax and
corporate income tax.
An exemption from taxation on
capital gains realized from the
disposal of fixed assets if the gains
are reinvested within a period of 3
years.
Time-limited exemption from
corporate tax or from the tax on
industrial and commercial profits.
Type of benefit Tax reduction Tax exemption
Training
BenefitNone
TimeframeInvestors have a two years deadline
to realize the investment.3 Year time limit
• To benefit from this regime, the
company must file a request with
the Minister of Finance before its
incorporation or the setting up of
the new business.
• The exemption is granted up to
the end of the fifth year.
Good to know Delay in processing to be expected.
The activity that the company is
involved in should not be a simple
development of an activity already
performed by the company;
• The new company should not
have as its main object to
compete with the activities of an
existing company which are being
performed satisfactorily; and
• The activity should be of particular
interest for the economic
development of Chad given the
size of the investment.
Northern Africa: ChadThe government of Chad offers a tax reduction for investments by private individuals and corporate bodies.
These incentives are detailed out in the Chadian tax code.
For further information please contact:
Jacques Pierre Bounang
Director, Tax
+23733439679
462016 Africa Incentive Survey
Northern Africa: LibyaThe Libyan Investments' Incentives regime are ruled by the Law 9 of 2010 which applies to national, foreign,
or joint venture capital jointly invested in specific business industries. The Free Trade Act of 1999
implemented the legal framework for establishing offshore free trade zones in Libya. The New Income Tax
Law (“NITL”) provides for a permanent exemption for income from farming activities. In 1999 the General
People’s Committee established the General Authority for Free Zones (GAFZ) with the purpose of supervising
the establishment and development of Free Trade Zones (“FTZ”) in Libya.
For further information please contact:
Slim Gargouri
Director, Accounting Advisory Services
+216 71 194 344
Tax Incentives
Incentives under the Law 9 of 2010Incentives under The Foreign Capital Investment Law 5
of 1997 (The Law)
Minimum
Investment
required
N/A
Project must achieve one or more of the following goals:
• increased exports or decreased imports;
• creation of new employment or training opportunities to
improve the technical skills of Libyan manpower;
• use of modern technology or technical expertise;
• provision of service(s) deemed necessary to the national
economy or a contribution to the development of such
services;
• contribution to integration between existing economic
activities through the reduction of the production costs of
other activities;
• projects or provision of materials and supplies for their
operations;
• use or help in making use of local raw materials; and
• Contribution to the development of remote or less
developed areas.
Maximum
benefit available
• Exemption from customs duties, import fees,
service charges and other fees and taxes of a
similar nature on the importation of machinery,
equipment;
• Exemption from all fees and taxes for a period of 5
years, on facilities, spare parts, transport means,
furniture, requirements, raw materials, publicity
and advertising items, related to the operation and
management of the project;
• Exemption from CIT for a period of 5 years;
• Exemption of the returns of shares and equities,
arising from the distribution of the investment
project’s interests;
• Exemption from interest arising from the project’s
activity if re-invested; and
• Exemption from all documentary records,
registers, transactions, agreements that are made,
ratified, signed or used by the investment project,
from the stamp duty.
• Exemption from CIT for a period of 5 years;
• Exemption from customs duties and similar taxes on the
importation of machinery, tools and equipment;
• Exemption from customs duties and similar taxes for a
period of 5 years on the importation of equipment, spare
parts and raw materials required for the running of the
project;
• Carry-forward of losses sustained within the exemption
period to subsequent years;
• Exemption of exported goods from fees and taxes on
exports; and
• Exemption from stamp duty on commercial documents
and bills.
472016 Africa Incentive Survey
Northern Africa: Libya (cont.)
Tax Incentives
Incentives under the Law 9 of 2010Incentives under The Foreign Capital Investment Law
5 of 1997 (The Law)
Type of benefit Tax exemption
Training Benefit None
Good to know
Other incentives are available, subject to a decision
from the General People’s Committee, under a
proposal from the Secretary, to offer for the
investment projects, tax privileges and exemptions
for a period, not exceeding 3 years, or other
additional privileges, if those projects prove that:
• They contribute to the achievement of food
security.
• Utilize measures that are capable of achieving
abundance in energy or water or contribute to
environmental protection.
• Contribute to the development of the area.
• The exemption is granted by a decision of the General
People’s Committee upon a request of the Secretary of
the General People’s Committee for Economy and
Commerce.
• The Law applies to projects funded by foreign capital
(whether held by Libyan nationals or foreigners) in the
following sectors: industry, Health, tourism, services
and agriculture.
• Time frames as set out above, additionally, the Law
provides that the exemption period from income taxes
and customs duties may be doubled if the project:
• is established in a local development area; or
• contributes to food security; or
• uses installations and means conducive to saving
energy or water; or
• contributes to the protection of the environment.
482016 Africa Incentive Survey
Northern Africa: MoroccoThe Moroccan tax code provides several tax incentives to promote foreign investment (Export activities,
Casablanca finance city, agricultural actives, listed shares, Export free zones, etc.) The Agency Marocaine De
Développement Des Investissements (AMDI) is an organization which is in charge of the development and
promotion of investment in Morocco.
For further information please contact:
Insaf Haitof
Partner, Tax
+212 537 633 702
Tax Incentives
Entities
established in
Casablanca
Finance City
Specific incentives
granted to
important
projects
Export Promotion
and hotel
incentives
Bank and holding
companies
located in
offshore zones
Business activities
within Export free
zones (EFZs)
Minimum
Investment
required
A minima of the
turnover with
foreign companies
between 20% and
60%.
Investments
exceeding 100
Million MAD (Other
criteria can be taken
into account).
None
Maximum
benefit
available
• National or
international
headquarters are
subject to
reduced
corporate tax at
a rate of 10%;
• Profit relating to
export turnovers
are fully exempt
from CIT during
the first 5 years
of operations
and subject to
8.75% for the
following years;
• Gross salaries
and wages paid
to employees
are subject to
income tax on
salaries at a rate
of 20% during 5
years; and
• Foreign
exchange
facilities.
• Up to 20%
participation of
the Government
in the expenses
(i.e. external
infrastructure
expenses, land
acquisition,
vocational
training);
• Exemption from
customs duties
on equipment
imported; and
• Exemption from
VAT.
• Profit relating to
export turnovers
are fully exempt
from CIT during the
first 5 years of
operations. The
applicable CIT rate
is 17.5%.
Offshore holding:
• Flat-rate of CIT
(USD 500 during
the first 15
years);
• 20% flat rate
personal income
tax for first 5
years; and
• Dividends are
exempt from
WHT in
proportion to the
offshore
turnover.
Offshore banks:
• Can opt during
the first 15 years
for the CIT
reduced rate of
10% or pay USD
25,000 as a flat
amount; and
• Dividends are
exempt from
WHT.
• Exemption from CIT
for the first 5 years
and applicable rate
of 8.75% for the
following 20 years;
and
• Exemption for the
dividends paid to
non-residents.
Type of
benefitTax reduction
Tax exemption,
Cash grantTax exemption
492016 Africa Incentive Survey
Northern Africa: Morocco (cont.)
Tax Incentives
Entities
established in
Casablanca
Finance City
Specific incentives
granted to
important
projects
Export Promotion
and hotel
incentives
Bank and holding
companies
located in
offshore zones
Business activities
within Export free
zones (EFZs)
Training
Benefit
Yes. Refund of
part of vocational
training.
Yes. Contribution
up to 20% for
professional training
costs.
Yes.Contribution to
professional training
costs may be
available depending
on the sector of
activities.
Yes. Refund of
part of vocational
training
Yes. Contribution to
professional training
costs may be available
depending on the
sector of activities
Good to
know
• Need to apply
for pre-approval
before company
is incorporated.
• Casablanca
Finance City
(“CFC”) is a
financial area
governed by the
law 44-10 where
financial and
non-financial
companies
carrying out
national or
international
activities can be
located.
• Need to apply for
pre-approval
before company
can claim.
• The incentives are
granted to
important
investments
under an
agreement signed
with the
Government.
N/A
• Need to apply
for pre-approval
before company
can claim.
• An offshore
bank/holding
should carry out
all its
transactions in
foreign currency
and its capital
shall be
expressed in
foreign currency.
Need to apply for pre-
approval before
company can claim.
502016 Africa Incentive Survey
Tax incentive
ExemptionSpecial Economic Zones
(Industrial Zones/Freeport’s)
Exemptions under the
Investment Encouragement Act
Minimum
Investment
required
500000 SDGNone, but must be located in a Gari
free zone.
None
Maximum
benefit
available
Exemption from VAT and Customs
& Business Profit Tax (BPT).
• Exemption from profits tax for a
period of 15 years;
• Exempt from personal income
tax;
• Exemption of products imported
into the free zone or exported
abroad from all customs fees and
taxes, except service fees;
• Real estate establishments inside
the free zones are exemption
from all taxes and fees; and
• Exemption from customs fees,
depending on materials used and
local costs incurred in production.
• Remittance of proceeds (net of all
taxes and other obligations) in the
event of sale or acquisition of the
enterprise;
• An automatic exemption from
payment of customs duties,
surcharges and other similar
duties relating to imported
machinery, equipment or
apparatus necessary for
production; and
• Capital allowances are granted to
investors who own depreciable
assets and use the assets in the
production of income.
Type of benefit Tax exemption
Training
BenefitNone
Good to Know
Among the measures aimed at
promoting foreign investment is the
establishment of free zones by the
government, including:
• the Khartoum free-trade zone, at
El-Gaily (45 km from Khartoum);
• the Port Sudan free-trade zone,
near to the port; and
• The Suakin free zone.
• All exempted activities are
subject to development tax at
rate of (5%); and
• Agricultural activities are subject
to (0%) BPT tax rate.
Northern Africa: SudanThe Investment Supreme Council is established and designated as the authority to be responsible of
investments as far as policies, plans and strategies are concerned. Moreover the Council has a coordinating
role between parties concerned in the capital city and in the states. The Council may be approved to secure
land for Investment activities, which may be available for use for a period range of 45 - 90 years.
For further information please contact:
Khaled Balbaa
Partner, Infrastructure
+20235362211 - E/ 1675
512016 Africa Incentive Survey
Northern Africa: TunisiaExcept for some specific economic sectors, Incentive Investments, for both national and foreign investors, is
regulated in Tunisia by the Incentive Investment Code. This Code set up the principle of free foreign
investment for manufacturing activities and several services sectors, including fully export service activities
covered by this Code.
For further information please contact:
Dhia Bouzayen
Partner , Tax
+21671194344
Tax Incentives
General Tax
incentives
Tax incentives for fully
exporting companies
(Industry and services)
Regional
developments
Incentives
Technology and
research Promotion
Incentives
Agricultural
Developments
Incentives
Minimum
Investment
required
None, but a
minimum of
equity ranging
between 10% or
30% of the
investment costs
is required
(depending on
the category of
the investment).
None
None, but a minimum of equity ranging between
10% or 30% of the investment costs is required
(depending on the category of the investment).
None, but a
minimum of equity
of 10% or 30% of
the investment
costs is required
(depending on the
category of the
investment).
Maximum
benefit
available
• Tax relief on
reinvested
profits limited
to 35% of the
profits subject
to tax;
• Customs
duties
exemption on
importation of
equipment;
• VAT limited to
12% on
importation of
equipment;
and
• VAT
Suspension
and
consumption
duty on the
local
acquisitions of
equipment.
• Reduced Corporate
Income Tax rate of
10% on export
profits;
• Full exemption from
corporate tax on
reinvested profits;
• VAT and Customs
duties exemption on
importation of the
goods and products,
necessary for the
export activities of the
company;
• Local VAT suspension
on any purchases of
goods and services
required for the
export activity of the
entity;
• VAT zero rate on their
exports; and
• Exemption of payroll
taxes.
• Income tax exemption on
profits for 10 or 5 years
depending on the regions
and a 50% tax base
reduction for a new
period of ten or 5 years
depending on regions as
well;
• Income tax exemption on
reinvested profits;
• Exemption of some
payroll taxes; and
• Social security
contribution exemption of
100% for 10 years.
• Bonus for energy
saving investment
and development
of renewable
energies: Bonus
generally ranging
between TND
2500 and TND
500 000
(generally
between 20% to
70% of the
investment);
• Reduction of
Customs duties to
the rate of 10% or
full exemption
(depending of the
investment); and
• VAT Suspension.
• Social security
contribution
exemption of
50% for 5 years.
• Tax exemption on
reinvested
profits;
• Full tax
exemption for the
10 first years of
operation;
• VAT suspended
on imported
capital goods that
have no locally-
made similar
counterparts; and
• State
Contribution may
also apply to
infrastructure
expenses to
develop areas
meant for fish
farming and for
cultivation using
geothermal
water.
522016 Africa Incentive Survey
Northern Africa: Tunisia (cont.)Tax Incentives
General Tax
incentives
Tax incentives for
fully exporting
companies
(Industry and
services)
Regional
developments
Incentives
Technology and
research Promotion
Incentives
Agricultural
Developments
Incentives
Type of
benefitTax exemption Tax exemption, Tax reduction Tax exemption
Training
BenefitNone
Full or partial coverage
by the State of training
staff costs
None
How to claim
/ Timeframe
An application
process submitted
within the APII
needs to be
followed with the
Tax authorities
mainly for the VAT
suspension.
An application
process submitted
within the APII
needs to be
followed with the
Tax authorities
mainly for the VAT
suspension
Time frame of 10
Years for the
reduced Corporate
Income tax rate
incentive.
An application
process needs to be
followed with the
competent
authorities.
An application process
needs to be followed
with the competent
authorities.
An application
process needs to
be followed with
the APIA.
Good to
know
APII generally deliver the APII declaration
granting the incentives within 15 days.The granting of the national social security incentives may take
longer.
8 countries
offer investors
additional tax
incentives for
companies
that invest in
training of its
own staff;
Western Africa
Gas flair:
Niger Delta
Nigeria
542016 Africa Incentive Survey
Western Africa: CameroonThe government of Cameroon offers incentives to investments by private individuals and corporate bodies.
These incentives are detailed out (as well as eligibility requirements) in the Law N° 2013/004 of 18 April 2013.
For further information please contact:
Jacques Pierre Bounang
Director, Tax
+23733439679
Tax Incentives
PPP Contracts Stock Exchange sectorIncentives for private
investments
Industrial Free Zone &
Special Free Zone
Minimum
Investment
required
None. 5 million to 25 Million XAF
None, but need to carry
out its activities under the
free zone regime.
Maximum
benefit
Available
• Registration free of
charge for deeds and
conventions entered
into during the first 5
years of the exploitation
phase, and 5%
reduction in the CIT
rate;
• VAT is borne by the
public entity; and
• Taxes and custom
duties is borne by the
public entity.
• Tax reduction of 20%
for a period of three
years for capital
increase representing
20% of the share
capital;
• Tax reduction of 25%
for a period of three
years for spin-offs
representing 20% of
the share capital; and
• Tax reduction of 28%
for a period of three
years from the date of
listing for capital
increase or spin-off
representing less than
20% of the share
capital.
Exoneration from VAT,
reduced rate of 5% on
custom duties, 50%
reduction on registration
duties, 50% to 75%
reduction on CIT, 50% to
75% reduction on tax on
income from stocks and
shares.
Tax exemption over the
first ten years of
operation, customs
exemptions on exports.
Type of benefit Tax reduction Tax exemption/reductionExemption from direct
taxes
Training
BenefitNone
Good to knowDelay in processing are
more frequent.
• Effective 1 January
2012.
• Possibility of cumulating
the stock exchange
system with other
systems such as
reinvestment, public-
private partnership.
• Delays in processing
are more frequent.
• In addition, approval
may be denied to an
investor in competition
with one or more other
investors benefiting
from the incentives,
provided that the
investor qualifies.
N/A
552016 Africa Incentive Survey
Tax incentive
Mining code / tax incentive Investment code / Tax incentiveCo-operation agreement with the
government
Minimum
Investment
required
None 200,000 $ 1,000,000,000 $
Maximum
Benefit
available
Unlimited benefit. 30% corporate
tax, decreasing method allowed,
WHT on interest exonerated.
Unlimited, Corporate tax exonerated.
Type of benefit Tax deductions, Tax reduction. Tax reduction
Training
BenefitNone
How to claim /
Timeframe
Need to obtain the exploration or
operation permit before company
can claim.
Applications must be submitted and
approved before start of projects.
The co-operation agreement needs
to be signed by both parties before
start of project.
Good to know
Mining subcontractors are also a
beneficiary; The reduced tax
concerns assets (or goods) linked to
the mining project; and the
financials can be held in foreign
currency.
Subcontractors are also a
beneficiary, the reduced tax
concerns only assets (or goods)
linked to the project.
Subcontractors are also a
beneficiary, the reduced tax
concerns only assets (or goods)
linked to the project.
Western Africa: DRCThe DRC Incentive regime is based on different codes and specific laws. The mining code, for example, is
managed by the Ministry of Mines and Finances, the Investments Code is managed by “ANAPI" the National
Agency for the Promotion of Investments, and the specific law on the co-operation agreement is managed by
the DRC Government.
For further information please contact:
Louison Kiyombo
Partner
+243817108607
562016 Africa Incentive Survey
Western Africa: GhanaThere are various tax incentives put in place by Ghana to stimulate investment. A new Income Tax Act, 2015
(Act 896) was signed into law by the President on 1 September 2015 and became effective on 1 January
2016. Specific incentives depending on the nature of the business and its importance or how strategic it is to
the country can also be granted by The Ghana Investment Promotion Centre (“GIPC”) in conjunction with the
Commissioner General of the Ghana Revenue Authority (“GRA”). All such incentives or waivers will however,
have to be approved by the Parliament of Ghana through the sector Ministry.
For further information please contact:
Kofi Frempong-Kore
Partner, Tax
+233 302770454
Tax Incentives
Tax incentives
(available to
companies in
specific industries
for specified number
of years)
Incentives
available to
companies
engaged in agro-
processing and
cocoa by-
products
Location
incentives
(manufacturing
companies
except agro
processing/cocoa
by-products)
Ghana free zones
(industrial zones/
freeports)
General investment
incentives on
registration with the
Ghana Investment
Promotion Center (GIPC)
Minimum
Investment
required
None
No minimum capital
required. However, an
investor should be able
to show evidence of
funding and also fulfill
the 70% export
requirement.
• For Joint Ventures with
Ghanaian partners, a
minimum contribution of
USD 200,000 in cash or
capital goods.
• For wholly owned
foreign ventures, the
minimum equity is USD
500,000 in cash or
capital goods.
Maximum
benefit
available
• Tax payable at the
rate of 1% of
chargeable income
for the indicated
number of years
after which they
will pay a standard
rate of 25% CIT;
• NB. The indicated
number of years
varies for different
industries / sectors.
• New companies
are taxed at 1%
for the first 5
years.
• Subsequently, a
25% tax rebate
if located in the
regional capitals
of the country,
and 50% tax
rebate if located
elsewhere,
applies.
• 25% Tax rebate
for companies in
the regional
capitals; and
• 50% Tax rebate
for
manufacturing
companies
located
elsewhere.
• 100% exemption
from direct and
indirect taxes on all
imports and exports;
• 100% exemption
from payment of
income tax on profit
for 10 years;
• Relief from double
taxation;
• Minimal customs
formalities; and
• Total exemption from
payment of
withholding taxes on
dividends arising out
of free zone
investments.
Automatic Immigrant
Quota’s available:
• For One expatriate when
equity invested is over
USD 50,000 and not
more than USD 250,000;
• For Two expatriates
when equity is over USD
250,000 and not more
than USD 500,000;
• For Three expatriates
when equity is over USD
500,000.00 and not
more than USD 700,000;
and
• For Four expatriates
when equity is more
than USD 700,000.
572016 Africa Incentive Survey
Western Africa: Ghana (cont.)
Tax Incentives
Tax incentives
(available to
companies in
specific industries
for specified number
of years)
Incentives available
to companies
engaged in agro-
processing and
cocoa by-products
Location incentives
(manufacturing
companies except
agro
processing/cocoa
by-products)
Ghana free zones
(industrial zones/
freeports)
General investment
incentives on
registration with
the Ghana
Investment
Promotion Center
(GIPC)
Type of benefit Tax reduction Tax rebate
Tax exemption / Tax
holidays for first ten
years; 15% CIT after
10 years for exports;
and 25% for local
sales. All other reliefs
and exemptions will
be taxed at their
respective applicable
rates.
Automatic Immigrant
Quota.
Training
BenefitNone
How to claim/
Timeframe
The time frame
applicable for the
benefit differs for
each respective
industry or sector.
None 10 years None
Good to know
• Unrealised losses
can be carried
forward for
between 3 to 5
years (5 years are
for priority sectors
and 3 years for all
other sectors).
• Currently, priority
sectors have not
been defined but it
is believed it will be
the same sectors
which had losses
carry forward in the
repealed Act. Those
sectors were;
Mining, Farming,
Agro-processing,
Timber,
manufacturing for
export, Tourism,
ICT (software
development) and
Venture Capital.
N/A
• A condition for the
grant of a free zone
license is that the
licensed entity
must export at least
70% of its output.
• 30% output is
allowed on the
domestic market.
• A free zone
enterprise could be
wholly-owned by a
foreigner.
• The minimum
capital requirement
does not apply to
portfolio investment
and an enterprise
set up solely for
export trading and
manufacturing.
• Free transferability
of convertible
currency through an
authorised dealer
bank of investment
guarantee, transfer
of capital, profit,
dividend and
personal
remittances.
582016 Africa Incentive Survey
Tax incentives (Table 1)
Pioneer Status
Incentive (PSI)
Work
Experience
Acquisition
Program
Relief
Employment
Tax Relief
Infrastructure
Tax Relief
(ITR)
Bonds &
Short Term
Government
Securities
(bonds issued
by corporate
bodies and
supranational
also inclusive)
Companies
engaged in
gas utilisation
(Downstream
Operations)
Gas
utilization
incentive
program
(Upstream
operations)
Minimum
Investment
required
Capital
expenditure of
not less than
N10 million to
qualify for the
pioneer status
incentive.
Minimum
net
employment
of 5 new
employees,
for a
minimum of
2 years.
Minimum net
employment
of 10
employees in
the relevant
assessment
period.
None
Maximum
benefit
available
• 5 year tax
holiday;
• Dividends paid
out of pioneer
profits shall be
tax exempt
when
distributed to
the
Company's
shareholders.
Exemption
from CIT up
to 5% of
assessable
profit in the
tax year in
which the
company
qualifies.
Exemption
from CIT up
to 5% of
assessable
profit in the
tax year to
which the
profits relate
but limited to
the gross
emoluments
paid to
qualifying
employees.
CIT
exemption of
30% of cost
incurred in
providing
infrastructure
or facilities of
a public
nature.
Gains from
acquisition /
disposal and
interest
earned by
holders of the
securities
above are tax
exempt.
• Tax free
period of 3
years
renewable
for 2 years
or 35%
investment
allowance.
• Additional
investment
allowance of
15% (only
where the
company
chooses the
tax free
period).
• Accelerated
capital
allowance.
• Tax free
dividend
during the
tax free
period.
• Gas income
is subject to
tax at the
rate of 30%.
• Gas
transferred
from a
Natural Gas
Liquid (NGL)
facility to
the gas-to-
liquids
facilities is
subject to
0%
Petroleum
Profits Tax
and 0%
royalty.
Western Africa: NigeriaNigeria is currently striving to attract foreign direct investments to grow other sectors of the economy given
the decline of revenue from the oil sector. Various Ministries, Departments, Agencies and Commissions are
charged with administering these incentives.
For further information please contact:
Victor Onyenkpa
Partner
+23412718 935
592016 Africa Incentive Survey
Tax incentives (Table 1 – continued)
Pioneer Status
Incentive (PSI)
Work
Experience
Acquisition
Program
Relief
Employment
Tax Relief
Infrastructure
Tax Relief
(ITR)
Bonds &
Short Term
Government
Securities
(bonds
issued by
corporate
bodies and
supranationa
l also
inclusive)
Companies
engaged in gas
utilisation
(Downstream
Operations)
Gas utilization
incentive
program
(Upstream
operations)
Type of
benefit
Tax holiday of 3 to 5years,
accelerated capital allowance,
tax free dividend.
Tax exemption
Tax holiday of 3
to 5 years,
accelerated
capital
allowance, tax
free dividend
and interest
deductibility.
Tax exemption,
Tax reduction.
Training
BenefitNone
How to
Claim /
Timeframe
Within the
pioneer period.
Only
claimable in
the third
year of
employmen
t of the new
employees
retained.
Can only be
utilised in
the first tax
year in
which
employees
were first
employed.
Claimed in
the
assessment
period in
which
infrastructure
or facility is
provided,
over 2
assessment
periods.
Exception is
for a 10 year
period from
2 January
2012.
There is a
statutory
requirement for
companies
engaged in gas
utilisation to
obtain
Ministerial
approval to
claim interest
deductions.
Within every
fiscal year of
filing tax
returns.
Good to
Know
Recently, the
Nigerian
Investment
Promotion
Commission
proposed a
processing fee
of 2% of
projected
profits and that
existing
companies
applying for
PSI are
required to
have additional
investment up
to 200% of
company's
original
investment.
Relief
cannot be
carried
forward to
other tax
years.
At least
60% of
those
employees
must be
individuals
without
prior work
experience
and
employed
within 3
years of
graduating
from
schools or
vocation.
Relief
cannot be
carried
forward to
another tax
year.
To qualify for
the
exemption,
the
infrastructure
facilities
must be
completed
and be in use
by both the
Company
and the
public. Any
unutilised
portion can
be utilised
within 2
subsequent
assessment
periods.
Interest on
federal
government
bonds
enjoys
indefinite
exemption
from CIT &
Capital Gains
Tax.
Grant of tax
holiday is
subject to
confirmation
that company is
engaged in gas
utilisation.
Investment
required to
separate crude
oil and gas
from the
reservoir into
usable
products is
also
considered as
part of oil field
development.
Western Africa: Nigeria (cont.)
602016 Africa Incentive Survey
Tax incentives (Table 2)
Free Trade Zones
(FTZ)
Export Expansion
Grant (EEG)*
Duty Drawback/
Suspension
Scheme
Deep Offshore
and Inland Basin
Production
Sharing Contracts
Fiscal Incentives
Mining of Solid
Minerals
Minimum
Investment
required
In practice, the
minimum
investment varies
from one FTZ to
another depending
on the approved
activities.
Current minimum
value of annual
export turnover is N5
million.
This is subject to
review from time to
time by the Nigerian
Export Promotion
Council (NEPC).
None
Maximum
benefit available
• Exemption from
all federal, state
and local
government
taxes, levies and
rates.
• Approved
enterprises to
import free of all
duties any capital
and consumer
goods, raw
materials,
components, or
articles to be
used in respect
of any approved
activity within
the zone .
Cash inducement for
qualifying exporters
to facilitate increase
in export volume and
diversify export
products and market
coverage.
Claim a refund of
import duty paid on
raw materials and
intermediate
products imported
for use in the
production of
finished goods for
export.
• Investment Tax
Credit (ITC) at
50% of
Qualifying Capital
Expenditure
(QCE) for
Production
Sharing
Contracts (PSC)
signed pre- July
1998.
• Royalty rate of
10% for
companies
operating in the
Inland Basin and
graduated
royalties rate for
companies in
Deep Offshore
operations
(ranging from 0%
to 12%
depending on
water depth).
• Tax holiday of 3
years renewable
for 2 years.
• Exemption from
customs and
import duties in
respect of plant,
machinery
equipment and
accessories
imported
exclusively for
mining
operations.
(However, the
plant and
equipment can
only be disposed
of locally upon
payment of the
applicable
customs and
import duties).
Western Africa: Nigeria (cont.)
612016 Africa Incentive Survey
Tax incentives (Table 2 – continued)
Free Trade Zones (FTZ)Export Expansion
Grant (EEG)*
Duty
Drawback/
Suspension
Scheme
Deep Offshore and
Inland Basin
Production Sharing
Contracts Fiscal
Incentives
Mining of Solid
Minerals
Maximum
benefit
available
(cont.)
• Repatriation of foreign
capital investment and
100% foreign ownership
allowable.
• No import and export
license required and
remittance of profits and
dividends earned by
foreign investors in the
export free zone
allowable.
• Accelerated capital
allowance on mining
expenditure (95%
initial allowance and
retention of 5% until
asset is disposed).
• Actual amount
incurred out of
reserves made for
environmental
protection, mine
rehabilitation,
reclamation and
mine closure shall
be tax deductible,
subject to
certification by an
independent
qualified person.
Type of
benefitTax exemption
Cash grant (Against
Future duty
payments)
Tax exemption Tax credit Grant
Training
BenefitNone
How to
claim /
Timeframe
Entire period of operating
within the export free
zone.
Applications must
be submitted to the
authority, along with
evidence of full
repatriation of export
proceeds.
None
Within every fiscal
year of filing tax
returns.
None
Good to
Know
• The 2 major legislation
that regulate FTZ in
Nigeria are; Nigeria
Export Processing
Zone Act (NEPZA) and
Oil & Gas Export Free
Zone Act (OGEFZA).
• Rent-free land at
construction stage,
thereafter rent shall be
determined by
authority.
In practice,
qualifying exporters
must have fully
repatriated all
proceeds within 180
days from the day of
export.
Apply for
exemption or
suspension of
import duty to
actual
importation.
(when this is
done, the
exporter is
conferred with
the status of
manufacturer-in-
bond).
Petroleum
Investment
Allowance (PIA) at
50% of QCE for
PSCC’s signed
after July 1998.
A company may
also be entitled to
claim an additional
rural investment
allowance on its
infrastructure cost,
depending on the
location of the
company and the
type of infrastructure
provided.
Western Africa: Nigeria (cont.)
622016 Africa Incentive Survey
Western Africa: Senegal
Incentives
Tax treatment
provided for by
the Investment
Code
Special regime applicable
to approved export firms
Reduction tax for
export:
Oil & Gas and
MiningLaw of 250 billions
Minimum
Investment
required
None
Investment must be
above 250 Billion
FCFA (1 USD=
582.282 CFA).
Maximum
benefit
available
New enterprises
and extension
projects:
• Custom duty
exemptions
(three years);
• VAT
suspension
(three years);
and
• The tax credit
of 40% for
eligible
investment
but it is
capped to
50% of the tax
profit and
should be
applied within
5 years from
the
investment.
• The benefits of this
regime remain valid for a
period of 25 years and can
be renewed. The
corporate tax rate is 15%;
• Exemption from customs
duties and duty stamps on
utilitarian vehicles and
tourism vehicles and
means of transportation
clearly intended for
production;
• Exemption from taxes
based on salaries paid by
companies;
• Exemption from all
registration and stamp
duties when registering a
company and modifying its
Articles of Association;
• Exemption from patent
fee, property tax on
constructed and
unconstructed property,
and from the license fee;
and
• Exemption from the taxes
on Income for Stocks and
Shares drawn by the firm
on the dividends
distributed.
• Allowed to
deduct 50% of
their taxable
income in the
calculation of
income tax; and
• Indirect exports
are excluded in
the
determination of
the turnover.
Exemption from
VAT and
additional taxes
on imports and
purchases to
companies
involved in
exploration of
minerals through
the means of an
agreement with
the Government.
For investments
above two hundred
and fifty billion CFA
francs, the
Government may
grant to the investor
special tax and
custom regime
derogating from the
advantages in the
investment code
and the mining
code.
There are various tax incentives put in place by Senegalese government to stimulate investment.
For further information please contact:
Mamadou Sarr
Senior Manager, Corporate & Investment
+221338492474
632016 Africa Incentive Survey
Western Africa: Senegal (cont.)
Tax Incentives
Tax treatment
provided for by the
Investment Code
Special regime
applicable to
approved export
firms
Reduction tax for
export
Oil & Gas and
MiningLaw of 250 billions
Type of benefit Tax exemption Special tax benefit
Training
BenefitNone
Good to know
Need to apply for
pre-approval before
company can claim.
• Need to apply for
pre-approval
before company
can claim.
• The company has
to export at least
80% of its
production .The
benefits of this
regime remain
valid for a period
of 25 years and
can be renewed.
Need to apply for
pre-approval before
company can claim
• To receive this
discount,
companies must
prove the export
is effective and
the repatriation of
the revenues into
Senegal; and
• Mining and oil
companies are
excluded from this
provision.
• Industrial,
agricultural and
tele-services
companies that
export at least
80% of their
production.
No need to apply for
pre-approval, before
company can claim.
Need to apply for
pre-approval before
company can claim.
642016 Africa Incentive Survey
Western Africa: Sierra LeoneInvestment in Sierra Leone is regulated by the Investment Promotions Act 2004, which provides for
investment incentives for both domestic and foreign investors. The Act was instituted to promote and attract
private investment, both domestic and foreign, for the development of value adding opportunities, export
creation and employment opportunities. Additional incentives can be given if applied for by investors,
however any agreement granting tax breaks and incentives to a taxpayer is required to be ratified by the
Parliament in order to have the force of law.
For further information please contact:
Claudius Williams-Tucker
Partner, Tax
+23230444111
Investment and
employment incentive
Infrastructure
projects
Donation into Skills
Development Fund Refinery
Minimum Investment
required
• For a period of 5 years: If
workforce is at least 100
employees, minimum
investment is
$5,000,000.
• For a period of 10 years
if workforce is at least
150 employees,
minimum investment is
$7,500,000.
$20 Million None
A minimum investment
of $20,000,000 into a
petroleum refinery
project and employing
at least fifty (50) Sierra
Leonean citizens.
Maximum benefit
Available
As of 1 January 2015,
registered Businesses in
SL that are at least 20%
Sierra Leonean owned are
entitled to corporate tax
exemption.
Not specified
Up to 100% of the cost
incurred is tax
deductible in the same
year
Corporate tax relief not
exceeding 5 years.
Import Duty exemption.
Type of benefit Tax exemption Tax Relief Tax deductionTax Relief and
Exemption
Training Benefit None
Timeframe/ How to
claim
5 to 10 years depending
on the investment criteria. 15 years. 1 year. Up to 5 years.
Good to knowSuch a provision may be revised in subsequent Finance Acts, but will remain in force
till repealed or amended.
652016 Africa Incentive Survey
Data included in the country by country tables in this survey has been obtained from the KPMG network of
offices in Africa as well as from the following sources:
• Source: KPMG Fiscal Guides,
http://www.kpmg.com/africa/en/kpmg-in-africa/pages/2015-african-country-reports.aspx
• Source : IBFD Database,
http://k-online2.ibfd.org/kbase/
Data included in the tables on pages 9 to 11 have been obtained from the following sources:
• Source: Country Specific Economic Data,
http://data.worldbank.org/country
• Source: Tax Rates Online,
https://home.kpmg.com/xx/en/home/services/tax/tax-tools-and-resources/tax-rates-online.html
The following references relate to quote icons included in the body of this Survey.
1) Source: Sub – Saharan Africa economies among world’s Top Improvers of doing Business, World Bank,
http://www.worldbank.org/en/news/press-release/2015/10/27/sub-saharan-africa-economies-among-
worlds-top-improvers-of-business-climate-says-doing-business-report
2) What are the current and future roles of natural resources in attracting FDI inflows to Africa?
http://www.blog.kpmgafrica.com/what-are-the-current-and-future-roles-of-natural-resources-in-attracting-
fdi-inflows-to-africa/
3) Source: Sub-Saharan regulatory reforms, World Bank,
http://www.worldbank.org/en/news/press-release/2014/10/29/sub-saharan-africa-business-regulatory-
reforms-worldwide
References / Sources
Disclaimer:
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or
entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate
as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without
appropriate professional advice after a thorough examination of the particular situation.
© 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity. Member firms of the KPMG network of independent
firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to
obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such
authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
662016 Africa Incentive Survey
ADEP Aquaculture Development and Enhancement
Programme
AGOA Africa Growth and Opportunity Act
AMDI Agency Marocaine De Développement Des
Investissements
ANAPI National Agency for the Promotion of
Investments
APIEX The Agency for Promotion of Investment and
Export
APII Agency for the Promotion of Industry and
Innovation
BNR Bank of Rwanda
BPT Business Profit Tax
CET Common External Tariff
CFA Communauté Financière Africaine
CFC Casablanca Finance City
CIP Critical Infrastructure Programme
CIT Corporate Income Tax
CITA Corporate Income Tax Act
CNI Conseil National de l’Investissement
CPI Centro de Promoção de Investimentos
DAO Development Approval Order
DRC Democratic Republic of Congo
DST Department of Science and Technology
DTI Deartment of Trade and Industry
EEG Expat Expansion Grant
EIA Ethiopian Investment Authority
EFZ Export Free Zones
EPA Economic Partnership Agreement
EPZ Export Processing Zone
FDI Foreign Direct Investment
FDj Djiboutian Franc
FTZ Free Trade Zone
GAFZ General Authority for Free Zones
GAZEDA Gabinete das Zonas Economicas de
Desenvolvimento Acelerado
GBC Global Business Company
GIPC Ghana Investment Promotion Centre
GRA Ghana Revenue Authority
GSP Generalized System of Preferences
ICT Information Communication Technology
ID Investment Deduction
IFSC International Financial Services Centre
Acronyms List of commonly or frequently used terms
IFZ Industrial Freeports/Zones
ITC Investment Tax Credit
ITR Infrastructure Tax Relief
KES Kenyan Shilling
MAD Moroccan Dirham
MITC Malawi Investment Trade Centre
MK Malawian Kwacha
MZN Mozambican Metical Rate
NEPC Nigerian Export Promotion Council
NGL Natural Gas Liquid
NIRA Namibia Inland Revenue Authority
NITL New Income Tax Law
NSE Nairobi Stock Exchange
OGEFZA Oil and Gas Export Free Zone
PAYE Pay As You Earn
PIL Private Investment Law
PPP Public/Private Partnership
PSC Product Sharing Contract
PSI Pioneer Status Incentive
QCE Qualifying Capital Expenditure
R&D Research and Development
RDB Rwanda Development Board
SACU Southern African Customs Union
SADC Southern African Development Community
SARS South African Revenue Services
SCS Smart Cities Scheme
SDG Sudanese Pound
SEZ Special Economic Zones
SIC Standard Industry classifying code
SPV Special Purpose Vehicle
SRA Swaziland Revenue Authority
TIC Tanzania Investment Centre
TND Tunisian Dinar
USD United State Dollar
VAT Value Added Tax
WHT Withholding Tax
XAF Central African Franc
ZDA Zambia Development Agency
ZIC Zimbabwean Investment Centre
ZRA Zimbabwean Revenue Authorities
672016 Africa Incentive Survey
— All countries surveyed offer a range of
enhanced tax incentives, ranging from
accelerated allowances for capital
expenditure, special allowances for
investments in certain industry sectors
(such as manufacturing, infrastructure,
tourism) as well as tax holidays
ranging from 3 to 10 years;
— Only 7 countries have local
participation or local job creation
requirements for accessing the
respective incentives;
— 8 countries offer investors additional
tax incentives for companies that
invest in training of its own staff;
— Nigeria and South Africa offer a
diverse range of both tax incentives
and cash grants from government
agencies for investing in defined
sectors (such as manufacturing, oil &
gas, tourism, financial services and the
‘green’ environmental economy);
— Morocco offers a cash contribution to
expenditure for large scale projects
greater than MAD 100 million;
— South Africa appears to be the only
country on the African continent that
offers a dedicated R&D tax incentive
regime, with an enhanced tax
deduction (150%), equivalent to that
offered by OECD countries.
Highlights of the survey
— The introduction of Special Economic
Zones and Free Port Zones (SEZ) now
appear as a common theme among
various African countries with 21 of the
28 countries surveyed offering SEZ
areas as additional incentives for
companies to invest in specific regions
within a country;
— South Africa have also passed into law
during Feb 2016 enabling legislation that
will see an initial 15 areas designated as
SEZ’s, and countries such as Swaziland
and Zimbabwe working on similar SEZ’s
to be introduced in the near future;
— Such SEZ’s offer a reduced Corporate
Income Tax (CIT) rate of between 0% to
15% (which compares favourably to the
average 29% CIT rate across the
countries surveyed), as well as other
benefits for example exemptions from
Value Added Tax and Customs and
Import/Export Duties together with
accelerated capital allowances;
— All countries have a requirement for
either pre-qualification or pre-approval to
be granted to the investing company by
the respective country’s regulatory
agency, and in certain instances (such as
in Botswana and the DRC for example)
government agencies are also willing to
enter into tax agreements and/or co-
operation agreements for investment
certainty.
From the information provided by our KPMG African network of professionals, the
term ‘Africa is open for business’ is apt if one considers the following highlights of
the survey:
kpmg.com
kpmg.com/za
kpmg.com/app
The information contained herein is of a general nature and is not intended to
address the circumstances of any particular individual or entity. Although we
endeavour to provide accurate and timely information, there can be no
guarantee that such information is accurate as of the date it is received or that it
will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the
particular situation.
© 2016 KPMG International Cooperative ("KPMG International"), a Swiss entity.
Member firms of the KPMG network of independent firms are affiliated with
KPMG International. KPMG International provides no services to clients. No
member firm has any authority to obligate or bind KPMG International or any
other member firm vis-à-vis third parties, nor does KPMG International have any
such authority to obligate or bind any member firm. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG
International.
Designed by KPMG South Africa
Publication name: Africa Incentive Survey 2016
Publication number: MC14401
Publication date: March 2016
Contact details
Mohammed Jada
Partner
Head: R&D Tax and incentives
KPMG in South Africa
T: +27116477419
T: +27827195531